Obama’s deal revived the inheritance tax that had been eliminated in 2010, but had been set to return to higher level. It applied a 35% tax rate to estates worth over $5 million for individuals. Obama also signed legislation cutting taxes in 2009 and 2013. In 2009, $288 billion were cut as part of the American Recovery and Reinvestment Act. In 2013, Obama approved the permanent extension of the Bush tax cuts for those below a certain income level as part of the fiscal cliff package. ARRA also reduced income taxes by the amount equal to the sales tax on a new car purchase. It provided tax cuts for investments in renewable energy and other small business tax cuts. The Congressional Budget Office estimated ARRA would save between 900,000 and 2.3 million jobs. In addition to tax cuts, it spent $224 billion on entitlement programs, education and health care. It also spent $271 billion for job creation using federal contracts, grants, and loans. In 2010, the House gained more than 60 Republicans. That created a majority who elected a new House Majority Leader, John Boehner. Republicans won additional seats in the Senate, but not the majority. They wanted to reduce the deficit, keep the Bush tax cuts for everyone, and eliminate Obamacare. The change meant Obama had to negotiate with the lame duck Congress. That enabled the Obama tax cuts to pass before the end of 2010. Instead, the American Taxpayer Relief Act extended the Bush tax cuts for those with incomes below a threshold. This threshold was $400,000 for individuals and $450,000 for married couples. Incomes at and above the threshold were taxed at the Clinton-era 39.6% tax rate. In addition to creating jobs, every dollar spent on unemployment benefits stimulates $1.73 in economic demand. This is according to an Economy.com study. The unemployed spend every dollar they receive on essentials, such as food, clothing, and housing. Trump’s tax plan lowered the top individual tax rate to 37%. It cut the corporate tax rate to 21%. The Act increases the deficit by $1 to $2 trillion over the next 10 years according to the Joint Committee on Taxation. It will increase growth by 0.7% annually, thus reducing some of the revenue loss from the $1.5 trillion in tax cuts. The Trump tax cut occurred while the economy was solidly in the expansion phase of the business cycle. The 2010 Obama cuts occurred only two years after the financial crisis. Congress was concerned that ending the cuts would throw the economy back into recession. Both cuts increased the deficit and debt.
