Obama tax pledge unrealistic

Obama made a firm tax pledge during the presidential campaign, repeating it numerous times in the weeks and months leading up to Election Day: no tax increases for individuals making less than $200,000 a year or couples making less than $250,000.

"Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes," Obama told a crowd in Dover, N.H., last year.

But less than a month after taking office, Obama signed an expansion of child health care financed by 62-cent tax increase on each pack of cigarettes.

Obama also signed an anti-smoking bill in June that grants authority to the Food and Drug Administration to regulate tobacco. To pay for the new program, a fee is being imposed on the industry — and presumably passed on to consumers — estimated to generate more than $5 billion over the next decade.

While not directly increasing taxes, a House-passed version of Obama's plan to reduce greenhouse gases blamed for causing global warming would similarly increase American families' home energy bills by $175 a year on average, according to the Congressional Budget Office.

Obama hasn't offered a detailed plan to fix health care, though his aides are working with lawmakers as they craft proposals. Obama included only a down payment for health care reform in the budget proposal he unveiled this spring.

He proposed limiting itemized tax deductions for individuals making more than $200,000 and couples making more than $250,000. The plan, which faces stiff opposition in Congress, would limit deductions for mortgage insurance, state and local taxes and charitable contributions, raising about $270 billion over the next decade.

Obama also proposed a series of business tax increases and accounting changes that would raise an additional $30 billion.

Kenneth Baer, a spokesman for the OMB, said Obama's cost reductions and tax increases add up to "a plan which gets you really close to what you need."

"Congress has other ideas," Baer said. "We'll work with them."

The appeal of Baucus's proposed tax on health benefits was the amount of money it could raise. Currently, employer-provided health benefits are not taxed, regardless of how generous they are.

One version of it would tax health benefits that exceed the value of the basic insurance plan offered to federal workers, raising about $420 billion over the next decade, according to the nonpartisan Joint Committee on Taxation. But limiting it to individuals making more than $100,000 a year and couples making more than $200,000 would raise only $162 billion.

The math illustrates how difficult it is to raise enough money to pay for expensive programs, when tax increases are limited to the wealthy.

"We're living in an era, over a period of 20 years or more, in which the idea that tax rates would actually be boosted is unutterable," said Aaron, the health care expert. "That has to stop."

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