Fact-Checker - Sarah Palin Lies About Tax Increase. Again.

Discussion in 'Politics' started by hermit, Aug 6, 2010.

  1. Sarah Palin said she wrote her notes on her hand so the "liberals" couldn't say she got her numbers wrong when she appeared on Fox News Sunday. Well, we're independent fact-checkers, and we still found accuracy issues with the former governor's statements on the expiring Bush tax cuts.

    "Let's turn to the Bush tax cuts, which are also becoming a big issue, the Bush tax cuts for the wealthy," said host Chris Wallace. "The Obama White House is now saying end the tax cuts. And these are the tax cuts for the top 2 percent of all households in America. You can save $678 billion, and it won't hurt the recovery. Governor, if you're serious, as you say you are, about the deficit, don't you have to do something?"

    "To reduce deficit spending and our enormous debt, you rein in spending," Palin replied. "You cut the budget. You don't take more from the private sector and grow government with it. ... The Obama administration and the Democrats in Congress -- they're all wet on this idea. It's idiotic to think about increasing taxes at a time like this."

    Wallace: " But you know, they would argue, 'Look, the economy did just fine during the Clinton years. The rates on the top 2 percent would be restored to what they were during the Clinton years.' The Republicans keep talking about being deficit hawks. This is $678 billion you're not going to pay for. They're saying you're being hypocritical. I say 'you' -- I'm talking about Republicans."

    Palin: "Yeah. No, this is going to result in the largest tax increase in U.S. history. And again, it's idiotic. And my palm isn't large enough to have written all my notes down on what this tax increase will result in. Let me just go through a couple of things that I want people to be aware of, because, you know, the spin coming from Gibbs and the White House -- you're never going to get the truth out of their messaging. But Democrats are poised now to cause this largest tax increase in U.S. history. It's a tax increase of $3.8 trillion over the next 10 years, and it will have an effect on every single American who pays an income tax. Small businesses especially will be hit hardest. ..."

    Wallace: "Can I just ask you, what do you have written on your hand?"

    Palin: "$3.8 trillion, next 10 years, so I didn't say 3.7 and then get dinged, you know, by the liberals saying I didn't know what I was talking about." (Read the complete exchange.)

    What caught our attention for fact-checking purposes was her claim that the Democratic plan would result in "the largest tax increase in history."

    Wallace's question was about letting the Bush tax cuts for the wealthy expire. President Barack Obama's plan would increase income taxes for individuals making more than $200,000 and for couples making more than $250,000, with indexing for inflation. Wallace mentions that the Republican proposal to retain the tax cuts for the wealthy is "$678 billion you're not going to pay for." That's a reasonable estimate of how much increasing taxes on top earners would generate over 10 years.

    Palin, however, responded as if the Democrats intend to allow all the Bush tax cuts to expire for everyone. If that were to happen, it would increase tax revenues by approximately $3.8 trillion over ten years.

    But that's not what Democrats are proposing; they want to leave tax rates untouched for people who make less. We've looked for a Democrat who supports letting all the Bush tax cuts expire, and we haven't been able to find one. (And in fact, the most notable person we've found who advocates letting them all expire is Alan Greenspan, the head of the Federal Reserve from 1987 to 2006. He said it would help bring down the deficit.) In fact, a handful of Democrats in Congress have supported keeping tax rates for the wealthy lower, too.

    But, to be clear, the tax cuts passed during the Bush administration do expire at the end of 2010. So if Congress doesn't act, taxes will go up for most people. The reason the tax cuts have expiration dates is because they were passed via a procedure known as reconciliation, which only requires 50 votes in the Senate. At the time, members of Congress hesitated to make them permanent for fear of deficits.

    So Palin is confusing the issue here by using numbers that assume all the tax cuts are going away. That is not the Democratic plan nor is it President Obama's plan.

    Now, let's look at the potential tax increases in comparison with other tax increases throughout history. Economists like to do this by calculating tax increases as a percentage of the Gross Domestic Product, or GDP. GDP means a country's entire annual economic economic output; it's a way of measuring the entire economy. If we calculate tax increases as a percentage of GDP, it means we don't have to worry about distortions from variables like inflation or economic growth.

    The most prominent study of tax increases and tax cuts over time was done by the U.S. Treasury Department, "Revenue Effects of Major Tax Bills." It calculated the size of all major tax provisions from 1940 to 2006 by calculating them as a percentage of GDP.

    There are no formal congressional proposals yet to keep the Bush tax cuts in place, so we don't have precise estimates from official sources like the nonpartisan Congressional Budget Office. Still, there's a good bit of consensus on what the tax increases would look like, both if lower rates expired only for high earners and also for all incomes. Wallace's number of $678 billion over 10 years is reasonable for high earners, and Palin's estimate of $3.8 trillion over 10 years is within a reasonable range, if you're talking about all taxpayers. (We've also seen estimates of $3.7 trillion and $3.2 trillion.)

    We ran the number with some help from tax experts and found that if only the tax cuts for high earners expire, the resulting tax increases would not be the largest in history. Tax increases for high earners would be roughly 0.4 percent of GDP in the first year they take effect. That's significantly less than a 1982 tax increase signed into law by President Ronald Reagan. The tax increase resulting from the Tax Equity and Fiscal Responsibility Act of 1982 came to 1.23 percent of GDP when the tax changes were fully implemented, four years after the law's passage.

    If you let all the Bush tax cuts expire, the tax increase would come to just above 2.2 percent of GDP. Clearly, that would be larger than the Reagan tax hike of 1982. But it would be smaller than one of the tax increases passed during World War II -- the Revenue Act of 1942, which is estimated at 5.04 percent of GDP.

    But again, letting all the tax cuts expire isn't the plan the Democrats are proposing, and it's not what Wallace asked Palin.

    Palin said, "Democrats are poised now to cause this largest tax increase in U.S. history." She was asked about tax cuts for the top 2 percent. Either Palin is confused about the revenue numbers involved with extending the tax cuts, or she's willfully distorting the Democratic plans. We'll let you be the judge of that. Regardless, Wallace was very specific about asking her about tax increases for the top 2 percent. And that does not represent the largest tax increase in history. The unlikely outcome that she seems to be talking about -- that all of the Bush tax cuts will be repealed -- wouldn't be the largest tax increase in history either. Palin read the number on her hand correctly, but that's about all she got right. So we rate her statement Pants on Fire.

  2. She "lied" because she used actual numbers and not percentage of GDP? This is how desperate and deceptive democrats are.

    Why quibble about if it is the largest or second largest or third largest? It's damn big. Is now, when the country is tottering on a double dip recession a reasonable time to enact a huge tax increase on the people who create jobs and economic growth? That's the question. It's also the reason lying liberals are so obsessed with changing the subject.

    Plus, I hardly think obama acolytes want to start a conversation about who is lying. Obama basically hasn't stopped lying since he hit washington.
  3. First of all, its a fact check, not a 'liberal' or a 'democrat' smear campaign, unnecessary strawman.

    As for taxes, check.



    As for the 'job creation' point, check the jobs created under Clinton with a 'higher' tax structure than Obama.

  4. Another day, another lie.

    Sarah Palin said Democrats have no plan to extend some of the Bush tax cuts.

    Sarah Palin disagreed with the Pants on Fire rating we gave her for the statement, "Democrats are poised now to cause this largest tax increase in U.S. history." So she let us have it, via a note on her Facebook page.

    "Yesterday, PolitiFact.com fact-checked my statement about the coming $3.8 trillion Obama tax hike – the largest tax increase in history. They did such a bad job of it, however, that I feel compelled to fact-check the fact-checkers," she began.

    Palin, the former governor of Alaska, made several points in her rebuttal, the primary one being that the Democrats haven't put forward a plan stating how they intend to address the expiring Bush tax cuts. Palin's comments on Fox News Sunday gave the impression that Democrats want to see them all expire.

    In fact, Democrats have repeatedly stated they only intend to let lower tax rates expire for individuals making more than $200,000 or couples making more than $250,000. And that's nowhere near the largest tax increase in history, as we noted in our rating.

    But Palin doesn't see it that way.

    "Unfortunately for PolitiFact, no such proposal exists. ... Plan? What plan? There is no plan. All we have is smoke and mirrors based on an old Obama campaign pledge that if elected, he would exempt families making less than $250,000 a year from 'any form of tax increases.' ...

    "To prevent PolitiFact from making similar mistakes in future, it would be helpful if the White House and the Democratic Congressional leadership finally mustered the courage to table their plans to let the 2001 and 2003 tax cuts expire. Mr. President, publish your proposals, and we'll duke it out. You can argue in favor of a multi-trillion dollar tax hike in an age of economic uncertainty and mass unemployment, and we'll argue for fiscal sanity combined with serious spending cuts. I for one look forward to such a debate."

    We're not trying to antagonize Gov. Palin, but President Barack Obama has indeed published his proposals in some detail -- at least twice, in the annual budget documents that the White House releases.

    The president's 2011 budget, for example, says on page 39, "Allow the Bush Tax Cuts for Households Earning More Than $250,000 to Expire."

    "In the last Administration, those at the very top enjoyed large tax breaks and income gains while almost everyone else struggled and real income for the middle class declined. Our Nation cannot afford to continue these tax cuts, which is why the President supports allowing those tax cuts that affect families earning more than $250,000 a year to expire and committing these resources to reducing the deficit instead. This step will have no effect on the 98 percent of all households who make less than $250,000."

    Lest you think that's too general and vague, there are detailed estimates in the budget summary tables, starting on page 164, for provisions such as, "Upper-income tax provisions devoted to deficit reduction: Expand the 28-percent rate and reinstate the 36-percent and 39.6-percent rates for those taxpayers with income over $250,000 (married) and $200,000 (single) ... Reinstate the personal exemption phaseout and limitation on itemized deductions for those taxpayers with income over $250,000 (married) and $200,000 (single) ... Impose 20-percent tax rate on capital gains and dividends for those taxpayers with income over $250,000 (married) and $200,000 (single)."

    In Congress, key Democratic leaders have indicated they are using the plan outlined in the federal budget as the framework for their legislation. The Senate Finance Committee held a hearing on dealing with the expiring tax cuts. Sen. Max Baucus, D-Mont., the committee's chair, said in a July 14, 2010, statement, "I support extending the middle-class tax cuts permanently, as soon as possible, so working families can keep more of their hard-earned money."

    The committee released a budget analysis from the Joint Committee on Taxation, "Estimated Effects on Economic Growth and Distribution." That document showed estimates for the cost to make the Bush tax cuts permanent for those who are now taxed at rates of 10 percent, 25 percent, 28 percent, "and part of the 33%." That 33 percent tax bracket, by the way, includes taxpayers who make slightly below and slightly above the benchmarks Obama described.

    And then there's also the U.S. Treasury Department's "General Explanations of the Administration's Fiscal Year 2011 Revenue Proposals," known by policy wonks as "the green book." It outlines in even more detail how the Obama administration plans to increase taxes for high-earners and keep the current rates for everyone else.

    "It is very much an official statement of policy. It's what they propose to do," said Roberton Williams, a senior fellow with the nonpartisan Tax Policy Center. "Obviously, Congress will do or won't do what it will. But I have heard no one on the Hill saying we should let everything expire."

    News coverage from other publications from The Wall Street Journal to our fellow fact-checkers at Factcheck.org have also noted the Democratic proposals and ideas on these issues.

    "The Democrats' plan seems to me to be quite explicit: keep the tax cuts for those under $250,000 and let those for the rich expire," said Norman Ornstein, resident scholar at the conservative American Enterprise Institute, and a longtime watcher of Congress. "Does that mean never, ever taxing the under-$250 (thousand) populace? No. But it is a straightforward policy plan."

    Palin does make a good point that there is not pending legislation to make some parts of the Bush tax cuts permanent. Certainly, lots of unexpected and surprising things can happen when Congress actually begins to take up legislation. It's possible that Congress could become entirely gridlocked. If no legislation passes, the Bush tax cuts will indeed expire for all incomes.

    And, she's also right that on the campaign trail Obama promised not to raise "any" taxes on a family making less than $250,000. We rated that Promise Broken after Obama signed laws increasing taxes on cigarettes and indoor tanning. There is also the controversial tax penalty in the new health care law that will tax those who don't have insurance, starting in 2014. Yet Obama also promised extend the Bush tax cuts for lower incomes and let the Bush tax cuts expire for higher incomes. Those two promises are both rated In the Works. (See all of Obama's tax promises.)

    But Palin was distorting the facts when she said, "All we have is smoke and mirrors based on an old Obama campaign pledge." There is much more than that in the public record from both President Obama and Democrats in Congress. Frankly, we anticipated criticism when we published our report on Palin, but we were not anticipating the criticism that the Democrats are hiding their intentions on tax rates for people of lower incomes, or the claim that Obama has not published fairly detailed outlines of what he intends for the tax code. There is a plan, and you can see it on pages 39 and 164-165 of the budget. We rate Palin's statement False.

  5. Yawn.

    Simple question here. Is it a good idea to raise taxes on the small business owners, entrepreneurs and others who create the vast majority of new jobs? Particularly, when we're on the verge of going off the cliff economically?

    For democrats, the answer is yes, because they have never seen a tax increase they didn't like, and whatever the situation, their answer is to raise taxes. After all, the idea that a single $200k crossing guard in california or a municpal adminstrator making $400k might lose their job is unthinkable. Better to gouge those of us scraping by in the private sector.
  6. Ricter


    That cost is passed on to the customer and it's a wash if the sector playing field is level. I admit that's a big 'if', particularly in a global free trade environment. But one way or another someone, here, in this country, not with petro dollars, has got to pay for the US adventures abroad. Oh, and pay for the gambling debts.

    As for the healthcare ball and chain dragging on us, it's true, it's a problem, even in the so called perfect social societies. But I think supply needs to be addressed. I don't know, but I'd hope that stimulus money is making more med school seats available. We do have time to create/recruit more doctors and such. Last I heard the AMA is not opposed to it (for once).
  7. You're selling that graph as if it's the definitive democrap plan for the Bush tax cuts when in fact there is NONE, just like Palin said. Tax cheat Timmy Geithner's recent comments are no more than that... comments.

    The source of your chart is the Tax Foundation and here's a more recent article from them than your link which describes how the expiration of the Bush tax cuts would affect average families.

    If there's a solid democrap plan, why is the Tax Foundation spinning their wheels on this? Answer: because there is no plan.


    August 3, 2010
    Report Shows How Expiration of Bush-Era Tax Cuts Would Affect Average Middle-Income Family by State, Congressional District
  8. This is the typical libtard canard... as if sucking resources out of the economy with higher taxes somehow contributed to job growth.

    Answer this simple question: had taxes been lower under Clinton, wouldn't there have been even more job growth?

    If so then why raise them now? Social "justice?" Wealth redistribution? You can't have it both ways.
  9. You are just lying, using bogus charts to display some kind of manufactured tax savings chart arranged to look official.
    problem with your lies is that numbers are all wrong.
    Married couple with 2 kids will face immediate increase of $ 1,400and not savigs of 112 as your lying ass posted .
    What agenda are you advancing that requires screwing working people out of tax breaks. You disgust me as a person..
  10. What is the world coming to if a right winger can't trust the Wall Street Journal. :D
    #10     Aug 7, 2010