Log in
Economics
1
answer
0
watching
124
views

According to the two “In the News” articles and the table below,

In the News: Obama Pitches Tax Hike on the Rich

WASHINGTON: President Barack Obama on Wednesday proposed raising taxes on the wealthiest Americans during a major speech Wednesday outlining his long-term plan to bring the federal budget closer to balance.

"At a time when the tax burden on the wealthy is at its lowest level in half a century, the most fortunate among us can afford to pay a little more," Obama told an audience at George Washington University. . . .

Republicans denounced the proposed tax hikes as a sure way to slow economic growth in the United States.

"It's very ironic that a few days before tax day in this country that the president would be coming out asking people to pay more taxes," said Representative Eric Cantor, the Republican majority leader in the House of Representatives.

I don't think many Americans believe that that's the answer to fix this economy and grow jobs.
Analysis: President Obama proposed ending the "tax break for the rich" by increasing the top marginal tax rate from 35 percent to 39.6 percent.
In the News: The Obamas' Taxes
Gross Income   Deductions  
Wages $ 395,188 State/local taxes $ 52,527
Interest 8,066 Property taxes 25,742
Dividends 9,997 Mortgage interest 49,945
Tax refunds 1,151 Charity 245,075
Book royalties 1,382,889 Total allowed $ 373,289
Capital loss (3,000)    
Trust income 1,323    
Total income $1,795,614    
       
Adjustments   Exemptions $ 14,600
Self-employment tax $ 18,518 Taxable income $1,340,207
Pension contribution 49,000 Tax $ 438,949
  $ 67,518    
Adjusted Gross Income $1,728,096    
Tax Bracket Marginal Tax Rate
$0-8,375 10%
$8,375-34,000 15
$34,000-82,400 25
$82,400-171,850 28
$171,850-373,650 33
Over $373,650 35


Had Obama succeeded in raising the top marginal tax rate, how much more tax would he have paid in 2010?

Instructions: Enter your response to two decimal places.

$

Watch
1
answer
0
watching
124
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Darryn D'Souza
Darryn D'SouzaLv10
30 Sep 2019

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share

Related textbook solutions

Principles of Economics
2nd Edition, 2017
Openstax
ISBN: 9781947172364
Principles of Macroeconomics
2 Edition,
Openstax
ISBN: 9781947172388
Principles of Microeconomics
2 Edition,
Openstax
ISBN: 9781947172340

Related questions

According to the two “In the News” articles and the table below,

In the News: Obama Pitches Tax Hike on the Rich

WASHINGTON—President Barack Obama on Wednesday proposed raising taxes on the wealthiest Americans during a major speech Wednesday outlining his long-term plan to bring the federal budget closer to balance.

“At a time when the tax burden on the wealthy is at its lowest level in half a century, the most fortunate among us can afford to pay a little more,” Obama told an audience at George Washington University. . . .

Republicans denounced the proposed tax hikes as a sure way to slow economic growth in the United States.

“It’s very ironic that a few days before tax day in this country that the president would be coming out asking people to pay more taxes,” said Representative Eric Cantor, the Republican majority leader in the House of Representatives.

“I don’t think many Americans believe that that’s the answer to fix this economy and grow jobs.”
Analysis: President Obama proposed ending the "tax break for the rich" by increasing the top marginal tax rate from 35 percent to 39.6 percent.

 

In the News: The Obamas' Taxes
Gross Income   Deductions  
Wages $ 395,188 State/local taxes $ 52,527
Interest 8,066 Property taxes 25,742
Dividends 9,997 Mortgage interest 49,945
Tax refunds 1,151 Charity 245,075
Book royalties 1,382,889 Total allowed $ 373,289
Capital loss (3,000)    
Trust income 1,323    
Total income $1,795,614    
       
Adjustments   Exemptions $ 14,600
Self-employment tax $ 18,518 Taxable income $1,340,207
Pension contribution 49,000 Tax $ 446,716
  $ 67,518    
Adjusted Gross Income $1,728,096    

 

Tax Bracket Marginal Tax Rate
$0-8,375 10%
$8,375-34,000 15
$34,000-82,400 25
$82,400-171,850 28
$171,850-373,650 33
Over $373,650 35


Had Obama succeeded in raising the top marginal tax rate, how much more tax would he have paid in 2010?

Instructions: Enter your response to two decimal places.

Congress is considering a major tax reform that will impact the revenue side of the budget. Last year President Obama insisted on new tax revenues from the wealthy arguing that old and poor people should not pay the entire burden of the deficit reduction through cuts on social programs, e.g., Medicare, Food Stamps as proposed by republicans. Congress recently passed a Budget Resolution discussing the policy changes they want in the national budget for next year. These proposals call for substantial cutbacks in social programs such as Food Stamps, Housing Support, Medicare, and reducing Medicare and abolishing Obamacare. Explain why you agree or disagree with Congress's best way to work toward a balanced budget. Many conservatives in Congress demand the President agree to their budget cuts and policy changes with the threat of shutting down the US government if he refuses to go along. Remember, the Constitution gives Congress the 'Power of the Pursue' that is to approve all taxes and expenditures.

Dems, GOP talk up deficit reduction, but don't act

WASHINGTON (AP) — Liberals' loud objections to White House proposals for slowing the growth of huge social programs make it clear that neither political party puts a high priority on reducing the deficit, despite much talk to the contrary.

For years, House Republicans have adamantly refused to raise income taxes, even though U.S. taxes are historically low, and the Bush-era tax cuts were a major cause of the current deficit.

And now, top Democrats are staunchly opposing changes to Medicare and Social Security benefits, despite studies showing the programs' financial paths are unsustainable.

Unless something gives, it's hard to see what will produce the significant compromises needed to tame the federal debt, which is nearing $17 trillion.

"There's not much of an appetite for deficit reduction," said Bob Bixby of the Concord Coalition, which pushes for "responsible fiscal policy."

There might be a few small steps this year, he said, when the government again needs to raise its borrowing limit. But a "grand bargain" involving significant spending cuts and revenue increases seems unlikely, Bixby said.

He added, "It's a little depressing to hear the reactions to the president's budget, from both sides."

There was nothing surprising about Republican denunciations of Obama's proposed tax increases, which he wants to combine with spending cuts to reduce the deficit.

The newer wrinkle was the left's sharp criticism of his proposals to slow the growth in Medicare and Social Security benefits, provided Republicans agree to new revenues. Obama has offered Republicans such a deal before. But this month's budget proposal gave it a new imprimatur.

The group MoveOn.org said Wednesday that supporters "who are outraged at President Obama's proposal to cut Social Security benefits will protest and deliver petitions" this week.

Sen. Bernie Sanders, a liberal independent from Vermont, is leading a similar petition drive, opposing "any benefit cuts to Social Security, Medicare or Medicaid." The deficit, his letter says, "was primarily caused during the Bush years by two unpaid-for wars, huge tax breaks for the rich and a prescription drug program" for Medicare, funded through borrowing. He suggests that higher taxes on the wealthy are the fairest way to tackle the deficit.

Democrats cite several reasons to raise taxes on high-income households. Obama campaigned for such tax increases in 2008 and 2012 but accomplished them only partially with the "fiscal cliff" resolution of Jan. 1.

Major tax cuts in 2001 and 2003 played big roles in turning a federal budget surplus into soaring deficits, according to research by the Congressional Budget Office and others. And by many measures, the U.S. tax burden in near historic lows.

Households earning roughly the national median income paid, on average, 11.1 percent of their income in total federal taxes in 2009, the most recent year for such data. That's the lowest level in more than 30 years, the CBO says.

Nonetheless, House Republicans have placed their highest priority on refusing to raise income tax rates, effectively ranking it above all other goals.

"The president got his tax hikes on Jan. 1," House Speaker John Boehner, R-Ohio, is fond of saying. It's a reference to the $620 billion in new revenues, over 10 years, that Republicans were unable to stop because of the "fiscal cliff" law, resolved on New Year's Day.

If it's easy to make a case for higher revenues, the same is true for slowing the growth of Social Security and Medicare benefits. For decades, studies have warned of approaching trouble in these popular but costly programs, as health care costs rise and baby boomers begin to retire.

"Both Medicare and Social Security cannot sustain projected long-run program costs under currently scheduled financing, and legislative modifications are necessary to avoid disruptive consequences for beneficiaries and taxpayers," the Social Security Administration says, summarizing findings by the two programs' trustees.

"The early detection light has been going on for a while, and there has been a failure to act," Social Security trustee Charles P. Blahous recently told a House panel. If lawmakers are to preserve the programs for future retirees, he said, they will have to accept much more "political pain" than officials endured during a 1983 overhaul that included "several extremely controversial measures."

Obama has proposed an often-discussed step, which deals with government accounting in general, not just entitlement programs. If Congress agrees to higher tax revenues, the president said, he would back a slower growth calculation for cost-of-living increases for Social Security benefits, plus higher Medicare premiums for higher-income seniors.

Interest groups have criticized both ideas. AARP calls the slower cost-of-living formula a "harmful change," and urges seniors to oppose it.

American voters can largely blame themselves when Congress is more talk than action on deficit reduction. Americans routinely say they want a smaller federal debt, but not at the cost of programs they hold dear — including Social Security and Medicare.

A CBS News poll in March found that most Americans want to cut spending and raise taxes to reduce the deficit. But 4 in 5 oppose cuts to Social Security or Medicare. And two-thirds are unwilling to have their own taxes raised in the name of deficit reduction.

When Pew Research asked which was more important — reducing the national debt or keeping Social Security and Medicare benefits as they are now — the public sided with safeguarding the benefits programs, 53 percent to 36 percent.

The deficit-spending partisanship continued Wednesday. On a party-line vote, House Ways and Means Committee Republicans passed a bill to protect Social Security recipients and investors in Treasury bonds if the government hits its borrowing limit and can't pay all its bills later this year. Democrats say if the federal government starts reneging on any obligations — even if it pays bondholders — financial markets will lose faith and the economy will tank.

Some Democrats fear a lose-lose situation if they support Obama's proposals. First, they could be attacked from the left for tweaking the programs that many Democrats see as their party's greatest legacy. And second, Republicans might accuse them of "raiding Medicare" in next year's congressional elections. That battle cry proved effective in 2010 after Obama's health care overhaul bill was passed.

Democrats call such tactics shamelessly hypocritical. Republicans, they note, have long called for reining in entitlement spending.

Boehner rebuked a top GOP campaign figure for hinting at a renewal of the "raiding Medicare" attacks. But Reince Priebus, the national Republican Party chairman, seemed eager to revive the question of whether Democratic trims to Medicare's costs amount to an unfair cut in benefits.

9. Read the AP article “Dems, GOP talk up deficit reduction, but don't act (Links to an external site.)” by C. Babington (Apr25’13).

a. What are the two basic ways of shrinking a budget deficit?

b. Which of your answers above are Republicans vehemently against? What are the potential negative economic effects of implementing this basic policy?

c. Which of your answers above are Democrats strongly opposed to? What are the potential negative economic effects of implementing this basic policy?

Weekly leaderboard

Home
Homework Help 3,900,000
Economics 400,000
Start filling in the gaps now
Log in