Remarks by the President on Preventing an Income Tax Increase on the Middle Class
2:40 P.M. EST
THE PRESIDENT: Well, I want to, first of all, just thank Tiffany and Richard, Jimmie and Velma for opening up their beautiful home to us. The reason that we’re here is because Tiffany is one of the people who responded to My2K.
As many of you know, we asked folks all across the country to talk a little bit about what would it mean if their income taxes went up in 2013, and Tiffany, who is a high school teacher, responded. Her husband, Richard, works at a Toyota dealership. They actually live with Tiffany’s parents, both of whom are still working. And so what Tiffany pointed out was that an increase of $2,000 or so for her and her husband in this household would actually mean $4,000 that was lost. And a couple of thousand dollars means a couple months’ rent for this family.
And the story they tell about working hard, my understanding is they’re interested in starting a business as well as the work that they currently do. They’ve got dreams and ambitions. They’ve got a beautiful 6-year-old son, Noah, who’s back with great-grandma. And they’re keeping it together, they’re working hard, they’re meeting their responsibilities.
For them to be burdened unnecessarily because Democrats and Republicans aren’t coming together to solve this problem gives you a sense of the costs involved in very personal terms. Obviously, it would also have an impact on our economy, because if this family has a couple of thousand dollars less to spend, that translates into $200 billion of less consumer spending next year. And that’s bad for businesses large and small. It’s bad for our economy. It means less folks are being hired, and we can be back in a downward spiral instead of the kind of virtuous cycle that we want to see.
So the message that I got from Tiffany and the message that I think we all want to send to members of Congress is this is a solvable problem. The Senate has already passed a bill that would make sure that middle-class taxes do not go up next year by a single dime. Ninety-eight percent of Americans whose incomes are $250,000 a year or less would not see any increases. Ninety-seven percent of small businesses would not see any increases in their income taxes. And even folks who make more than $250,000 would still have a tax break for their incomes up to $250,000. So 100 percent of Americans actually would be keeping a portion of their tax cuts, and 98 percent of them would not be seeing any increase in their income tax.
That’s the right thing to do for our economy. It’s the right thing to do for families like Tiffany’s and Richard’s. And it’s very important that we get this done now, that we don’t wait. We’re in the midst of the Christmas season; I think the American people are counting on this getting solved. The closer it gets to the brink, the more stressed they’re going to be. Businesses are making decisions right now about investment and hiring, and if they don’t have confidence that we can get this thing done, then they’re going to start pulling back and we could have a rocky time in our economy over the next several months, or even next year.
So I’m encouraged to see that there’s been some discussion on the part of Republicans acknowledging the need for additional revenue. As I’ve indicated, the only way to get the kind of revenue for a balanced deficit reduction plan is to make sure that we’re also modestly increasing rates for people who can afford it -- folks like me. For folks who are in the top 2 percent, we can afford to have a modest rate increase. That allows us to not only reduce our deficit in a balanced, responsible way, it also allows us to make investments in education, in making college affordable, in putting folks back to work, and investing in basic research that’s important for our economy.
And I think we all recognize that there are some smart cuts we’ve got to make in government. We’re going to have to strengthen our entitlement programs so that they’re there for future generations. Everybody is going to have to share in some sacrifice, but it starts with folks who are in the best position to sacrifice, who are in the best position to do a little bit more to step up. And that’s what my plan does.
So just to be clear, I’m not going to sign any package that somehow prevents the top rate from going up for folks at the top 2 percent. But I do remain optimistic that we can get something done that is good for families like this one’s and that is good for the American economy.
All right. Thank you very much, everybody.
2:45 P.M. EST