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Has Obama Raised Taxes? That Depends on Whom You Ask

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In this Sept. 22, 2010, file photo President Obama, accompanied by Health and Human Services Secretary Kathleen Sebelius, center, speaks at a private residence in Falls Church, Va. (AP)

As American taxpayers wait to see whether Congress will extend the Bush tax cuts -- and for which taxpayers, if it does -- some critics of President Obama say he's already reneged on his 2008 campaign pledge not to raise taxes on anyone but the rich.

Americans for Tax Reform (ATR) point to the cost of Obama's health care legislation as proof that the president has violated his pledge not to raise taxes on families earning less than $250,000 and on individuals earning less than $200,000.

On top of that, ATR said, Obama's added an extra whammy for smokers by approving the largest tobacco tax increase ever, including a nearly 62-cent increase -- to a $1.01 -- on a pack of cigarettes, as well as other tobacco products.

The White House at the time said the increase didn't violate Obama's pledge because it didn't apply to income, payroll or investment taxes. What's more, his supporters said, the money gained from the tobacco tax is intended to finance a major expansion of health insurance for children.

"The president's position throughout the campaign was that he would not raise income or payroll taxes on families making less than $250,000, and that's a promise he has kept," a White House spokesman said last year. "In this case, he supported a public health measure that will extend health coverage to 4 million children who are currently uninsured."

Robert McIntyre, director of the progressive Citizens for Tax Justice, acknowledged that while the tobacco tax increase was "probably the biggest one in the bunch," he said it was outweighed by Obama's expansion of the child tax credit and the earned income tax credit.

"If somebody raises your tax by one dollar on cigarettes and gives you $100 in tax cuts, you're probably feeling pretty good about that," McIntyre said.

In March, Obama signed into law a health care bill that has divided the nation and prompted calls from Republicans for repeal. While most Americans say they like some elements of the law, such as preventing insurers from denying coverage to children based on pre-existing conditions, they are unlikely to enjoy the new taxes in the law, Americans for Tax Reform wrote in its analysis.

According to the group, the individual mandate tax, which starts in 2014, will require anyone not buying "qualifying" health insurance to pay an income surtax of $495. That amount increases to $990 for two members of a family and $1,485 for three-member families.

Among other tax hikes found in the health care law are:

  • the medicine cabinet tax, which begins in January. It will prevent consumers from using their health savings accounts (HSA), flexible spending accounts (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin), the group found.
  • the HSA withdrawal tax hike, which starts in January. It increases additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, making them less appealing than IRAs and other tax-advantaged accounts, which remain at 10 percent, the group said.
  •  the flexible spending account cap, or the "Special Needs Kids Tax," which is now unlimited. It will be capped at $2,500 beginning in January. The new cap will impose a "particularly cruel and onerous" burden on parents of special needs children who use the money to pay for costly tuition, the group argued.
  • the medical itemized deductions cap, which allows consumers to deduct medical expenses if the total cost reduces the filer's income by 7.5 percent, will face a threshold of 10 percent starting in 2013. "This new tax will most adversely affect early retirees and the catastrophically ill," the analysis claims, noting that this tax has been waved for taxpayers 65 and older from 2013 to 2016.
  • the tax on indoor tanning services, which began in July, imposes a new 10 percent excise tax on Americans using indoor tanning salons.

A White House official told FoxNews.com that the law includes the largest health care "tax cut" in history for middle-class families, citing Congressional Budget Office estimates that Americans buying the same coverage they have today in the individual market will see premiums fall by 14 to 20 percent.

"Those who advocate the status quo advocate for the continuation of a hidden tax of at least $1,000 that the millions of Americans who get insurance through their job or buy it on their own are already paying each year to cover the costs of caring for those without insurance," the official said.

Michael Ettlinger, vice president for economic policy at the Center for American Progress, said the provisions don't add up to a broken campaign pledge.

"If he was changing what parts of the Bush tax cuts he was going to extend or lowering that or if he really proposed some major broad-based consumption tax, that would be a violation," Ettlinger said. 

"These are relatively small things hitting relatively small groups of people that was kind of put to him by Congress in the context as one of his top priorities," he said. "Acting as if he breached some sacred promise shows ATR's obsession with taxes as if that's the only thing that matters."

But John Kartch, a spokesman for ATR, said Obama's campaign promise wasn't "if we just stir everything together, it's a tax cut." 

"His pledge was not to raise taxes on families making $250,000 or less," he said. "There's no comeback to that. It's just a fact." 

This is the fourth article in a series. Next: The Golden Years . . . Will They Still Be Golden?