That is good to know, because what I read Last night regarding this seemed to make little sense and was akin to socialist policies of Europeans, rather than Americans.
Let me explain this a bit and see how crafty this whole thing is. Increasing taxes is neither good or bad. Good or bad happens depending on what you do with the tax revenue. There are two things a government can do with the tax revenue: reduce deficits and/or fund generous social programs. Most of the discussion on increasing taxes in America centers around reducing deficits. Europeans focus on increasing taxes to fund generous social programs (Although not all European countries are same--UK and Germany are more capitalistic than Spain, Italy and France). So America and Europe focus on different things when they increase taxes.
America once had a top tax rate as high as 94%. During 1970s-1980s it was as high as 70% and today it is less than 40% (
TopTaxBracket_TaxRate.jpg Photo by OnlyObvious | Photobucket), which is less than Clinton's era before two major wars and the great recession. What really changed is that world got richer, American military stronger and America could reduce tax rates by selling inflation-protected bonds to countries like Japan (1980-1990s) and China (1990s-2000s). The problem today is that America's deficit is making its enemies stronger. China is funding its military using interest America pays on its debt.
If America raises taxes to reduce deficits then there is no problem. With huge deficits, taxes will go up sooner or later anyway unless economy grows, which will reduce the need to raise taxes. Reducing deficits makes America stronger. The place where it gets crafty is that Obama wants to increase taxes to do both (reduce deficits and fund social programs). Congress wants government to cut social programs to reduce deficit. Both Obama and Congress take extreme positions. Most likely compromise would be small increase in taxes and small cut in government programs. All the money from increase in taxes and savings from social program cuts will go toward reducing deficit. This way both Obama and Congress come out looking like a winner. Also, this is the only thing that is in the best interest of America as well as for the world economy. Keep in mind that America still needs to regain its S&P credit rating of AAA+ so that is one factor that will be weighing on the minds of Congress and even Obama because he is the first US president who had this credit rating downgrade.
There is another aspect to this equation. Real social programs like Welfare and State Pensions are state's responsibility and are funded by state taxes. States like California, Illinois etc. that mismanage these programs end up insolvent and sometimes lose their populations to other low tax states thereby reducing their tax base even further. However, Federal government administered social programs like Social Security and Medicare are really not social programs in the sense that they are funded by individuals and not by the government. So technically cutting Federal social programs really is Federal taxation. It is like putting money into provident fund and government not giving you interest it had promised. Every working American has to pay for national interests one way or the other. The real job of the government is to get as many Americans working as possible. Low taxation encourages people to work because they get to keep more of their money than they would get otherwise by not working.
The place where Europe gets it wrong is that it penalizes rich and takes money from them to help poor. Increasing taxes this way reduces productivity because such tax structure inhibits people from working hard. With reduction in productivity, national wealth goes down and everyone becomes poor together. For more detail analysis see this:
The Effect of Income Taxes on Economic Growth
BTW, Obama's personal income is falling (
http://money.cnn.com/2013/04/12/pf/taxes/obama-tax-returns/index.html?iid=Lead). Once out of office, he has to learn to live with less and that can be a problem!
