"Those are the marginal tax rates and how they would change, analyzed here, via Greg Mankiw. The key point is this: "Reducing a person’s tax credit as his income goes up also reduces his incentive to earn more income." Source: The Obama Tax Plan
The author then takes great pains to say he is not endorsing John McCain, but merely pointing out the effects of the Obama plan. Face it, Obama doesn't really understand taxes.
4 comments:
Obama understands taxes; you don't. See my post here - http://gecon.blogspot.com/ - or just read the article carefully.
I am one of the authors of the article about Obama's tax plan that is mentioned here. I want to clarify that our article does not find "tax increases on poor" under Obama's plan in the sense of higher tax payments by the poor (or by the middle class). As our article makes clear, most people would pay lower taxes under Obama's plan because he would cut taxes for the lower and middle classes.
The point of our article, available at
http://www.american.com/archive/2008/august-08-08/the-folly-of-obama2019s-tax-plan
is that Obama's tax cuts are designed in ways that raise marginal tax rates and therefore reduce incentives to earn income. The marginal rate rises because the size of the tax cut falls as income rises. But, tax payments are lower under Obama's plan (than under current law) at all of the income levels shown in our chart.
Alan D. Viard, Resident Scholar
American Enterprise Institute
Maynard, thanks for stopping by, we'll have to disagree on who understands taxes and the economy.
Mr. Viard, I understood the point of the study, and find the parsing too discreet. Senator Obama's newest tax proposal, albeit moving more to the middle, is still going to penalize married couples and as you suggest cause marginal tax increases to create dis-incentives.
This economy needs flatter and more incentive driven taxation, not jagged and arbitrary. Thanks for stopping by, we don't get to converse much with the authors of studies such as yours.
Odd, both Maynard and Viard have PhDs in economics, and both are professors of Economics in different but prestigious schools... You really think you understand taxes better than them?
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