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’s tax tables for 2013, which were released last week.
And 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.
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 the Bush tax cuts to expire; there were also new taxes on high incomes passed along with the Affordable Care Act, a.k.a. Obamacare.
If Mitt Romney had won, we can be sure that Republicans would have found a way to prevent these tax hikes. 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.
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.
Now, 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.
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.
Paul Krugman is a columnist for The New York Times.