Tuesday, February 8, 2011

USING MISLEADING WORDS - OBAMA'S FORTE

Obama to O'Reilly: " I didn't raise taxes, Once."

In an interview on Super Bowl Sunday, Fox News host Bill O'Reilly asked President Barack Obama to react to a Wall Street Journal editorial that accused Obama of being "a determined man of the left whose goal is to redistribute much larger levels of income across society."

"Do you deny that you are a man who wants to redistribute wealth?" O'Reilly asked.

Obama first noted the conservatism of the Wall Street Journal's editorial page, then denied the charge "absolutely."

"I didn't raise taxes once. I lowered taxes over the last two years," Obama said.


We wanted to fact-check that statement, and we'll begin by saying Obama boils down an awful lot of complexity about federal tax policy into a short sound bite.

Looking at the whole statement, he's both right and wrong. For clarity's sake, we're going to take Obama's statement in two parts. Here, we'll look at his statement, "I didn't raise taxes once." In a separate report, we'll look at his statement, "I lowered taxes over the last two years."

The idea that Obama did not raise taxes is just plain wrong. He signed legislation raising taxes on cigarettes and other tobacco products soon after taking office; that money goes to pay for children's health insurance programs. The law went into effect in 2009. He also signed the health care law, which includes taxes on indoor tanning that went into effect last year. (Regular PolitiFact readers will remember our fact-check of reality TV star Snooki and her complaint about the new tax last year.)

The new health care law also includes a tax on people who decide not to have health insurance, as an incentive for them to get coverage. The tax phases in gradually, starting in 2014. By 2016, the tax would be $695 per uninsured person up to a maximum of three times that amount, or $2,085. The law includes exemptions for people who can't find affordable insurance, and a few other special circumstances.

More significantly, the health care law includes new taxes on the wealthy, starting in 2013. Individuals who make more than $200,000 and couples that make more than $250,000 will see additional Medicare taxes of 0.9 percent. They will also, for the first time, have to pay Medicare taxes on their investment income at a 3.8 percent rate. (Current law is that all workers and employers split a 2.9 percent Medicare tax; the self-employed pay all of it.)

The small percentages may not sound like a lot, but those taxes are expected to generate $210 billion over 10 years, or just over half of all the new revenues the health care law authorizes. Other provisions include new fees on health insurance companies and prescription drug manufacturers, and a new tax on high-cost "Cadillac" health insurance plans.

Before we rule on this item, though, we should note that Obama has not raised income taxes. Thanks to a compromise he brokered with Republicans at the end of 2010, income tax rates are staying the same for people of all incomes. Obama had favored raising taxes on high earners, but he gave up on that as part of the tax deal. In exchange, he gained a a 2 percent reduction in payroll taxes for all workers. When you combine that with small tax cuts that were part of the economic stimulus, most taxpayers have seen reduced rates under Obama's administration.

Obama said, "I didn't raise taxes once." But we've documented numerous instances when he has. He's has signed off on small tax cuts for most taxpayers, but that doesn't change the fact that he's also approved several tax increases. So we rate his statement False.

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