Repeal the Bush tax cuts for higher incomes

Obama budget forecasts tax increases for higher incomes

Updated: Thursday, February 26th, 2009 | By Angie Drobnic Holan

President Obama's Office of Management and Budget unveiled a broad outline of its plans for the 2010 budget on Feb. 26, 2009, highlighting investments in health, energy and education.

To pay for some of those items, Obama proposed allowing the Bush tax cuts to expire as scheduled on people who make more than $200,000 and couples who make more than $250,000. For those income levels, his plan increases rates on the two highest income tax brackets, raising the 33 percent bracket to 36 percent and the 35 percent bracket to 39.6 percent. Under Obama's plan, those tax cuts expire, as scheduled, in 2011.

When asked whether those tax increases would hinder economic growth during a recession, spokesman Robert Gibbs reiterated that taxes for the wealthy would not increase until 2011, almost two years from this writing.

President Obama "doesn't believe that the changes that are being made would hinder economic growth," Gibbs added. "I would point out that many of these rates for families that make above $250,000 a year revert to the rates that we saw throughout the '90s, when this economy enjoyed fairly robust economic growth."

To be clear, the proposal is now simply an outline of Obama's budget, and the budget still has to be approved by Congress, where Republicans are likely to oppose any effort to let the Bush tax cuts expire. So for now, we rate this promise In the Works.

Sources:

Office of Budget and Management, Budget Documents for Fiscal Year 2010 , accessed Feb. 26, 2009

Office of Budget and Management, Summary Tables , Table S-6, page 123, accessed Feb. 26, 2009

C-SPAN, Peter Orszag briefs reporters on the 2010 budget plan , Feb. 26, 2009

C-SPAN, White House Briefing with Press Secretary Robert Gibbs , Feb. 26, 2009