Given our current economy (and our economic standings for the last decade, if not the last 30 years), the United States might not be in any position to honor that request, however. And if it does, as recent news alludes it may, then our country is in for one heck of an economic roller coaster.
President Obama's initial goal was to reinstate the temporary tax reductions for all but the wealthiest two percent of the country. Every individual making under $200,000 and every married couple earning less than $250,000 would be allowed to maintain the reduced rate of federal income taxes that were only temporarily instated beginning in 2001 (see table below for the reduced tax rates currently imposed).
A goal in doing so would be to protect the lower 98 percent as we continue to face these hard economic times.
Individuals and families earning more than those amounts, who make up only two percent of the U.S. population, would return to a previous tax rate of 39.6 percent upon the highest bracket in income scale. For an individual clearing $500,000 net, this change will amount to an increase of about $5,800 in taxes owed.
The Republicans who will soon hold majority in the House, however, are protesting that increase. And they won't let it occur unless it happens to all income brackets, either.
(chart above from "2010 Federal Income Tax Brackets")
That $5,800 difference in the example of an individual clearing $500,000 amounts to a 3.8 percent increase in taxes owed. For someone making a middle-class income of $45,000, though, the increase in taxes upon reinstatement of the older rates would amount to about $2,000 - a 27 percent increase in taxes owed.
And in this economic era of very high unemployment and very sharp decrease in individual earnings, our nation can't afford either structure the Republicans are insistent upon.
We're increasing in debt - both as a country and as individual citizens. We're holding the highest rate of unemployment, and for the longest period of time, since the Great Depression. And we're facing deficiencies in funding for areas of primary need, such as education and unemployment benefits.
FACT: the United States currently has the lowest tax rate on wealth since 1931 - when the Great Depression went in full-swing, and has the lowest taxes on wealth of all developed nations.
FACT: the United States is the only country that applies income taxation upon citizens that live under its own definition of poverty.
Add to these facts an additional and largely overlooked truth, this one related to corporate income taxes. A 2008 study by the Government Accountability Office found that more than half of all American companies did not have to pay income taxes for at least one year between 1998 and 2005 (and almost three-quarters of all foreign companies doing business in the U.S. enjoyed that luxury). About half of all companies doing business in the U.S. - both American-owned and foreign - were able to skip out on tax payments for two or more years during this same eight-year period.
This amounts to a very low estimate of $300 billion in corporate taxes that the U.S. did not collect in each and every one of those eight consecutive years - $2.4 trillion minimum overall. That's practically enough to fund an entire year's budget of the federal government.
How, then, given all these facts, can anyone (especially the top two percent in income in the U.S.) claim that taxes need to continue at a reduced rate for wealth? How can anyone claim that U.S. companies are overtaxed, or that a reduction in corporate taxes is what our country needs to rise from this dismal economic circumstances?
And how terrible would the U.S. economy be at the moment if those proper tax rates had been in effect all along?
For the Republicans in the U.S. House of Representatives to make such demands indicates even more economic woes for the next two years.