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President Obama has passed wide-ranging tax relief for working families and small businesses — the drivers of economic growth. But to pay down our deficit and invest in the future, we have to make hard choices. That means asking those at the top to do their fair share and putting an end to special privileges and loopholes that benefit those who need them the least.
Tax Cuts for the Middle Class
Within weeks of taking office, President Obama took immediate action in the midst of the economic crisis to restore security for middle-class families by cutting their taxes in the Recovery Act.
Since then, President Obama has continued to cut taxes for middle class families to make it easier for them to make ends meet. In the first four years of the Obama administration, a typical family making $50,000 a year has received tax cuts totaling $3,600 – more if they were putting a child through college.
On January 2, 2013, President Obama signed bipartisan legislation that will make sure income tax rates stay low permanently for 98 percent of Americans, while asking the wealthiest households to pay a little more to help reduce the deficit. Learn more about the American Taxpayer Relief Act of 2012.
Tax Cuts for Small Businesses
President Obama firmly believes that entrepreneurs and small businesses are engines of economic growth, and that their investments and innovation have been at the forefront of our economic recovery. That’s why he and his Administration have focused on strengthening small businesses by signing into law 18 tax cuts for small businesses. These tax credits are helping small business hire and grow, provide affordable health insurance to employees, and invest in new machinery and equipment
The tax code has become increasingly complicated and unfair. Under today’s tax laws, those who can afford expert advice can avoid paying their fair share and interests with the most connected lobbyists can get exemptions and special treatment written into our tax code. While many of the tax incentives serve important purposes, taken together the tax expenditures in the law are inefficient, unfair, duplicative, or even unnecessary.
That is why President Obama has called on Congress to enact comprehensive tax reform that meets the following five principles:
1. Lower tax rates.
The tax system should be simplified and work for all Americans with lower individual and corporate tax rates and fewer brackets.
2. Cut inefficient and unfair tax breaks.
Cut tax breaks that are inefficient, unfair, or both so that the American people and businesses spend less time and less money each year filing taxes and cannot avoid their responsibility by gaming the system. This includes cutting tax preferences for high-income households; eliminating special tax breaks for oil and gas companies; closing loopholes for investment fund managers; and eliminating benefits for corporate jet owners.
3. Cut the deficit.
The American Taxpayer Relief Act of 2012 cuts the deficit by $737 billion by asking the wealthiest to pay their fair share and builds on the $1 trillion in spending cuts President Obama signed into law through the Budget Control Act in 2011. Moving forward, President Obama is committed to reducing the deficit even more, splitting savings in a balanced way between spending cuts and raising revenue from the wealthiest Americans.
4. Increase job creation and growth in the United States.
Make America stronger at home and more competitive globally by increasing the incentive to work and invest in the United States.
5. Observe the Buffett Rule.
As multi-billionaire Warren Buffet has pointed out, his average tax rate is lower than his secretary’s. No household making over $1 million annually should pay a smaller share of their total income in taxes than middle-class families. Read more about tax fairness and the Buffett Rule
Understanding Where Your Tax Dollars Are Spent
In his 2011 State of the Union Address, President Obama promised that, for the first time ever, American taxpayers would be able to go online and see exactly how their federal tax dollars are spent. Just enter a few pieces of information about your taxes, and the taxpayer receipt will give you a breakdown of how your tax dollars are spent on priorities like education, veterans benefits, or health care.