You have to be seriously geeky to get excited when the Internal Revenue Service releases a new batch of statistics. Well, I’m a big geek. Like quite a few other people who work on policy issues, I was eagerly awaiting the IRS’ tax tables for 2013, which were released recently.
What these tables show is that elections really do have consequences.
You might think that this is obvious. But on the left, in particular, there are some people who, disappointed by the limits of what President Barack Obama has accomplished, minimize the differences between the parties. Whoever the next president is, they assert — or at least whoever it is if it’s not Bernie Sanders — things will remain pretty much the same, with the wealthy continuing to dominate the scene. And it’s true that if you were expecting Obama to preside over a complete transformation of America’s political and economic scene, what he’s actually achieved can seem like a big letdown.
But the truth is that Obama’s election in 2008 and re-election in 2012 had some real, quantifiable consequences. Which brings me to those IRS tables.
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For one of the important consequences of the 2012 election was that Obama was able to go through with a significant rise in taxes on high incomes. Partly this was achieved by allowing the upper end of President George W. Bush’s tax cuts to expire. There were also new taxes on high incomes passed along with the Affordable Care Act.
If Mitt Romney had won, we can be sure that Republicans would have found a way to prevent these tax hikes. And we can now see what happened because he didn’t. According to the new tables, the average income tax rate for 99 percent of Americans barely changed from 2012 to 2013, but the tax rate for the top 1 percent rose by more than four percentage points. The tax rise was even bigger for very high incomes: 6.5 percentage points for the top 0.01 percent.
These numbers aren’t enough to give us a full picture of taxes at the top, which requires taking account of other taxes, especially taxes on corporate profits that indirectly affect the income of stockholders. But the available numbers are consistent with Congressional Budget Office projections of the effects of the 2013 tax increases —projections which said that the effective federal tax rate on the 1 percent would rise roughly back to its pre-Reagan level. No, really: For top incomes, Obama has effectively rolled back not just the Bush tax cuts but Ronald Reagan’s as well.
The point, of course, was not to punish the rich but to raise money for progressive priorities, and though the 2013 tax hike wasn’t gigantic, it was significant. Those higher rates on the 1 percent correspond to about $70 billion a year in revenue. This happens to be in the same ballpark as both food stamps and budget office estimates of this year’s net outlays on Obamacare. So we’re not talking about something trivial.
Speaking of Obamacare, that’s another thing Republicans would surely have killed if 2012 had gone the other way. Instead, the program went into effect at the beginning of 2014. And the effect on health care has been huge. According to estimates from the Centers for Disease Control and Prevention, the number of uninsured Americans fell 17 million between 2012 and the first half of 2015, with further declines most likely ahead.
So the 2012 election had major consequences. America would look very different today if it had gone the other way.
To be fair, some widely predicted consequences of Obama’s re-election — predicted by his opponents — didn’t happen. Gasoline prices didn’t soar. Stocks didn’t plunge. The economy didn’t collapse. In fact, the U.S. economy has now added more than twice as many private-sector jobs under Obama as it did over the same period of the George W. Bush administration, and the unemployment rate is a full point lower than the rate Romney promised to achieve by the end of 2016.
In other words, the 2012 election didn’t just allow progressives to achieve some important goals. It also gave them an opportunity to show that achieving these goals is feasible. No, asking the rich to pay somewhat more in taxes while helping the less fortunate won’t destroy the economy.
So now we’re heading for another presidential election. And once again the stakes are high. Whoever the Republicans nominate will be committed to destroying Obamacare and slashing taxes on the wealthy — in fact, the current GOP tax-cut plans make the Bush cuts look puny. Whoever the Democrats nominate will first and foremost be committed to defending the achievements of the past seven years.
The bottom line is that presidential elections matter a lot, even if the people on the ballot aren’t as fiery as you might like. Don’t let anyone tell you otherwise.