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November 06, 2021

Clearing up an important myth about taxes under Barack Obama

Tonight, if we’re to believe the hype, will mark the deciding moment in one of the closest American presidential races there ever was.

Barack_Obama_addresses_joint_session_of_Congress_2009-02-24And while no one’s accusing American voters – any voters, really – of being the most informed bunch, taxes once more have become a divisive point in this election.

For years Americans have heard what taxes have been under Barack Obama, and what they will continue to be if he’s allowed four more years. Mitt Romney, by contrast, must be the only antidote.

This post will move to side with neither candidate, but as votes are tallied by our closest neighbours to the south, it’s important to clear up a few things about taxes under President Obama.

Certainly, whatever numbers may say, there is an undeniable perception that Obama’s liberalism has ravaged the American tax code. Evidence be damned, his detractors call him a socialist and believe their hard-earned bucks fall within his crosshairs.

*Bing: How to bring down your taxable income

But as a point of fact, income taxes haven’t been as low in the U.S. as they have since Eisenhower was in office.

According to the Bureau of Economic Analysis, Americans pay an average income tax rate of 23.6 per cent, down from an average of about 27 per cent seen during the ‘70s, ‘80s and ‘90s. Not since 1958 has the average income tax rate been lower in the U.S.

Of course, that is only half the story with Obama. In America, there are five tax rates based on levels of income – 10, 15, 25, 33 and 35 per cent. If re-elected, Obama says he’ll keep those first three rates (10, 15 and 25 per cent) flat.

But the last two will rise, should the president earn a second term. Obama’s proposal will be to jack the 33 per cent rate to 36 per cent, and the 35 per cent rate to 39.6 per cent. Only those earning more than $200,000 a year would be affected.

Romney, for his part, says he won’t raise any income taxes, and in addition to keeping the higher tax rates flat the former Massachusetts Governor says he’ll reduce each tax rate by 20 per cent. That means that, on the low end, some Americans could pay income taxes as low as eight per cent (in Canada, the lowest possible income tax rate between federal and provincial is 19 per cent, in Nunavut).

Income taxes, then, will more desirable for Americans under a Mitt Romney government. But that aside, it’s worth noting that Barack Obama’s government has not presided over tax gouging, rather the lowest duties charged to American taxpayers in more than fifty years.

By Jason Buckland, MSN Money

*WhiteHouse.gov photo



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...