President Barack Obama pushed for a one-year extension of the current tax rates, but only for taxpayers making under $250,000 a year.
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Speaking with a group of families and workers who would benefit from an extension of the tax rates, Obama rejected the idea of extending tax cuts for upper-income taxpayers.
“Many members of the other party believe that prosperity comes from the top down, so that if we spend trillions more on tax cuts for the wealthiest Americans, that that will somehow unleash jobs and economic growth,” he said Monday. “I disagree. I think they’re wrong. I believe our prosperity has always come from an economy that’s built on a strong and growing middle class—one that can afford to buy the products that our businesses sell; a middle class that can own homes, and send their kids to college, and save enough to retire on. That’s why I’ve cut middle-class taxes every year that I’ve been President—by $3,600 for the typical middle-class family. “
Obama noted that at the beginning of the last decade, Congress passed trillions of dollars in tax cuts that largely benefited the wealthiest Americans. “We were told that it would lead to more jobs and higher incomes for everybody, and that prosperity would start at the top but then trickle down,” he said. “And what happened? The wealthy got wealthier, but most Americans struggled. Instead of creating more jobs, we had the slowest job growth in half a century. Instead of widespread prosperity, the typical family saw its income fall. And in just a few years, we went from record surpluses under Bill Clinton to record deficits that we are now still struggling to pay off today. So we don’t need more top-down economics. We’ve tried that theory. We’ve seen what happens. We can’t afford to go back to it.”
Obama acknowledged that the outcome of the November election will largely determine what will happen with tax reform, but he urged Congress to pass a one-year extension to provide more certainty for the middle class. House Republicans plan to introduce legislation this month to extend the current tax rates for taxpayers at all income levels, but Obama insisted that the current tax rates should only be extended for the middle class for now. He noted that his opponent in the general election, who is expected to be Mitt Romney, has a different position on tax cuts.
“In many ways, the fate of the tax cut for the wealthiest Americans will be decided by the outcome of the next election,” he said. “My opponent will fight to keep them in place. I will fight to end them. But that argument shouldn’t threaten you. It shouldn’t threaten the 98 percent of Americans who just want to know that their taxes won’t go up next year. Middle-class families and small business owners, they deserve that guarantee. They deserve that certainty. It will be good for the economy and it will be good for you. And we should give you that certainty now. We should do it now. It will be good for you. It will be good for the economy as a whole.”
Obama said he would immediately sign a bill to extend the tax cuts for the middle class. “So my message to Congress is this: Pass a bill extending the tax cuts for the middle class; I will sign it tomorrow,” he said. “Pass it next week; I’ll sign it next week. As soon as that gets done, we can continue to have a debate about whether it’s a good idea to also extend the tax cuts for the wealthiest Americans. I’ll have one position. The other side will have another. And we’ll have that debate, and the American people can listen to that debate. And then next year, once the election is over, things have calmed down a little bit, based on what the American people have said and how they’ve spoken during that election, we’ll be in a good position to decide how to reform our entire tax code in a simple way that lowers rates and helps our economy grow, and brings down our deficit — because that’s something that we’re going to have to do for the long term. But right now, our top priority has to be giving middle-class families and small businesses the security they deserve. You’re the ones who are driving this recovery forward, and I think it’s time to widen the circle of opportunity and help more Americans who work hard to get ahead. It’s time that we learned the lessons of our past and lay the foundation for a better future. That’s what I’m focused on every day, and I hope Congress will join me in doing the right thing.”
House Ways and Means Chairman Dave Camp, R-Mich., said Republicans would vote to prevent any tax increases from occurring. “Republicans have called for a fairer, flatter and simpler Tax Code that lowers rates, gets rid of lobbyist loopholes and creates more economic growth and jobs,” he said in a statement. “The President is simply calling for higher taxes on families, small businesses and investors, which will only further weaken an already fragile economy. His support for another job-killing tax hike will only provide Washington more money to feed its insatiable appetite for reckless spending. The answer to our weak economy is not to take more money from Americans—the answer is to put American families and job creators first. House Republicans will vote this month to stop the tax hike on every American and create a path for tax reform that levels the playing field for the hardworking Americans and businesses trying to compete in a global economy.”