Conservative pundits and their followers were shrieking in rage on Tax Day last week, so wrought up they forgot to mention that Americans are paying less in taxes under President Obama than they paid under his conservative predecessor, George W. Bush.
The Recovery Act signed by Obama last year cut federal income taxes for 98 percent of working Americans, according to Citizens for Tax Justice, an activist group. Arkansans did even better, although the state voted against Obama in the 2008 presidential election. Ninety-nine percent of working families in Arkansas benefited from at least one of the tax cuts signed into law by Obama. The average tax break was $1,016. Obama has signed no legislation to increase taxes.
Obama and a Democratic Congress gave tax breaks to people at different levels of income, with emphasis on helping those in the middle and at the bottom. Expansion of the child tax credit (CTC) and the earned income tax credit (EITC) mainly helped the poorest three-fifths of taxpayers. Both are refundable tax credits, so that they often benefit people who don't earn enough to owe federal income taxes, although they do pay other, more regressive taxes, such as state and local sales taxes. Low-income Arkansans received an average of $216 in benefits from expansion of the CTC and the EITC.
The Making Work Pay Credit benefits all but the richest taxpayers. It puts cash in the hands of those with incomes of less than $75,000. Because low- and middle-income people spend new money quicker than rich people, it's believed the credit increases the consumer demand needed to create jobs. Working people in Arkansas received an average of $528 from the Making Work Pay Credit in 2009.
Even rich people got some benefit from Obama's tax cuts. The Alternative Minimum Tax is a kind of backup income tax meant to ensure that wealthy Americans pay some minimal level of income taxes no matter how good they are at finding loopholes. More Americans would have had to pay the AMT in 2009 if the Recovery Act hadn't blocked that expansion. In Arkansas, 96.6 percent of the benefits of AMT relief went to the richest fifth of the state's taxpayers.