Poor Will See Tax Increases Under Obama Tax Cut Deal

The St. Petersburg Times editorial board rules that President Barack Obama got played on the tax cuts deal.

Another example: The president and congressional Republicans agreed to a 2 percent cut in payroll taxes for one year. While every working American would enjoy some benefit, those making $106,800 or more in 2011 would get the maximum $2,136 tax cut. A cut in payroll taxes can stimulate the economy, but it should have been targeted to middle- and lower-income households who are more likely to spend the money. It makes no sense to cut payroll taxes for all and deprive the Social Security system of the money just as the president's deficit commission and fiscal conservatives are focused on shoring up the program's future solvency.

The Tax Policy Center made this chart. Under the "Make Work Pay" tax cuts if you make under $10,000 you receive a $315 tax cut. The payroll holiday tax provides only a $118 tax cut for that bracket.

Obama let his "Make Work Pay" tax cuts sunset. In exchange, Obama got the payroll holiday tax cut. Republicans get to bleed Social Security and Medicare. In return, Obama raised taxes on the three lowest brackets. Those making between $10,000 to $20,000 will see their taxes increase by $173. The St. Petersburg Times is right. Obama got played.



Update: Lawrence Summers admits to Politico that taxes for those making under $20,000 will go up.