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Louis Jacobson
By Louis Jacobson January 11, 2016
Back to Create a tax credit of $500 for workers

On-and-off enactment of worker tax credit earns Obama a Compromise

A year ago, in the run-up to his 2015 State of the Union address, President Barack Obama revived a proposal that had roots dating back to his 2008 presidential campaign.

During Obama's first presidential campaign, he promised to enact a $500 tax credit for workers. Something similar -- the Making Work Pay tax credit -- was enacted for the tax years 2009 and 2010. It maxed out for individuals at $400, not $500, so at the time we rated the promise Compromise.

As the tax cut was expiring, Obama was in negotiations with lawmakers. Ultimately, he gave up on the Making Work Pay tax credit in exchange for a payroll tax cut. With this change, we kept the rating at Compromise. At the end of 2012, the payroll tax cut expired.

Then, in a White House preview of his 2015 State of the Union address, Obama proposed another $500 tax credit for workers, structured somewhat differently. The document released by the White House said the president "will propose a new $500 second-earner credit to help cover the additional costs faced by families in which both spouses work — benefiting 24 million couples."

Obama did propose this credit in his fiscal year 2016 budget proposal, but we could find no evidence that this had been passed. (It's common for presidential budget proposals to be considered "dead on arrival" in Congress, especially when one or more chambers is controlled by the opposite party, as was the case in 2015.)

The credit "was not in the recent PATH Act that made permanent or extended expiring tax proposals and which was the single major tax bill of the year," said Roberton Williams, a fellow at the Urban Institute-Brookings Institution Tax Policy Center.

The White House said Obama "remains committed" to "a new second-earner credit of up to $500 that recognizes the additional costs faced by families in which both spouses work."

"While Congress has not yet acted on this proposal, the president continues to support -- and advocate for -- such action," the White House said.

We rate promises based on outcomes. The predecessor tax cuts have expired, and the 2015 proposal has not been acted upon, but he did get tax cuts of this sort enacted for half of his tenure. Because Obama has mixed accomplishment on this promise, we rate it a Compromise.

Our Sources

White House, "Fact Sheet: A Simpler, Fairer Tax Code That Responsibly Invests in Middle Class Families," January 17, 2015

Internal Revenue Service, "Making Work Pay Questions and Answers: General Issues," accessed Jan. 11, 2016

Office of Management and Budget, fiscal 2016 budget proposal

Forbes, "Dear America: Your Higher Payroll Taxes Are Not The Result Of A Tax Increase," Jan 14, 2013

Email interview with Dean Baker, co-director of the Center for Economic and Policy Research, Jan. 11, 2016

Email interview with Roberton Williams, fellow at the Urban Institute-Brookings Institution Tax Policy Center, Jan. 11, 2016