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Will Taxing the Wealthy Reduce the Federal Deficit?

New Report Undercuts Obama Claims; Proves Higher Taxes = Higher Spending

Oct 16 2010

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Washington, DC - President Obama and congressional Democrats argue it’s necessary to raise taxes on high wage earners in order to reduce the skyrocketing federal deficit. In his most recent budget message to Congress, the president vows to “eliminate the Bush tax cuts for those making more than $250,000 a year and devote those resources instead to reducing the deficit.”  

But a new congressional review casts doubt on that claim, revealing that since President Obama took office he has signed seven major new initiatives that increase taxes by $625 billion - with not a single dollar devoted to reducing the deficit.   

It all went to new spending, plus some.   

For every one dollar in higher tax revenue, President Obama and congressional Democrats spent nearly twice that much - $1.91 - in new spending included in the same legislation according to a review by the minority staff of the Joint Economic Committee.   

“Without exception, every tax increase was used to expand government and spending” confirmed U.S. Congressman Kevin Brady (R-TX), the top House Republican on the Joint Economic Committee. "Not a dime was used to reduce the deficit." 

“Raising taxes in a struggling economy is foolish enough, but given their perfect 7-0 track record who seriously believes that Democrats will use higher taxes from the expiration of the Bush tax cuts to cut the deficit?" asked Brady. "These tax increases will simply fund new spending and an expanded government. The only proven way to get the budget under control is to restrict spending.”  

Taken together, the seven new iniatitives levied $625 billion in higher taxes and will result in $1.195 trillion in new spending over the next decade according to data from the Congressional Budget Office and Joint Committee on Taxation.  

The seven initiatives signed into law during the 111th session of Congress include the stimulus and the new national health care law. Higher taxes were levied on medical devices, health care plans, homes sales and small businesses, among others. 

  *An updated CBO cost estimate from May 11, 2010 was used for H.R. 3590 [the spending estimate was increased by $115 billion].

**The CBO cost estimate for this bill is entitled Senate Amendment 4425 to the Unemployment Compensation Extension Act of 2010, available at

Contact: Tracee Evans (Rep. Brady’s office) | (202) 374-9377

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