Taxing issues on the US election agenda
US PRESIDENT Barack Obama says he wants to return to a more equitable America, where tax reform, regulation and government support for infrastructure and education would give everyone “a fair shot”.
For Republican rival Mitt Romney, the election is about Obama’s stewardship of the economy, which he blames for the highest US debt since the second World War and budget deficits exceeding $1 trillion (€796 billion) annually.
The congressional budget office published on Wednesday its last semi-annual report on the US economy before the November 6th election. Democrats and Republicans concluded an agreement during last year’s debt ceiling crisis that would automatically raise taxes and slash government spending if they had not compromised by the end of this year. That “fiscal cliff” would have catastrophic effects, the budget office warned, including a “significant recession” and the loss of another two million jobs.
Both camps saw the report as a vindication of their policies. “We can see what’s happening over in Europe,” said Romney. “People have spent more than they have taken in, year after year after year, borrowed more and more money, made promises they couldn’t fulfil, and finally something which had to end did end.”
The White House interpreted the report as an indictment of the unfair US tax system. The Republicans “are willing to hold the middle class hostage unless we also give massive new tax cuts to millionaires and billionaires – tax cuts we can’t afford that would do nothing to strengthen the economy”, spokesman Jay Carney said.
The Obama-Biden and Romney-Ryan tax plans provide a stark contrast. Vice-presidential candidate Paul Ryan drew up the most elaborate policy, as chairman of the House budget committee. He wants to reduce six income tax brackets to two: Americans earning up to $50,000 would pay 10 per cent; those earning more than $50,000 would pay 25 per cent.
Romney’s income tax policy is slightly different. He would reduce all Americans’ income tax rate by 20 per cent, and cap the top rate at 28 per cent.
Obama would leave income tax unchanged for families living on less than $250,000 annually, but raise the top bracket from 35 per cent to 39.6 per cent.
Romney and Ryan want to repeal the alternative minimum tax, which was designed to ensure a minimum tax rate for the rich.
Obama wants to enact the “Buffett rule”, which would require any household earning more than $1 million a year to pay at least 30 per cent income tax.