The Folly of Obama’s Tax Plan

The American online magazine has an article by Alex Brill and Alan D. Viard that was posted on August 8, 2008 about Senator Obama’s proposed ‘tax cuts for the middle class’ which they say are actually marginal rate hikes in disguise.

Click on the graph below to make it larger.

"Senator Barack Obama declared recently that he wants to “reform our tax code so that it rewards work and not just wealth.” We think that is a great goal if it means a simple tax system with low marginal tax rates. Unfortunately, a close inspection of Obama’s proposals reveals something disquieting: he would raise marginal tax rates for many middle-income taxpayers, a bad move for anyone seeking to promote economic growth.

Although Obama is offering a new series of tax breaks, they undermine rather than improve economic incentives." Go here to read more. (Tip of the cap to Jeremiah Films)

This also is illustrative and comes from Americans for Tax Reform:

McCain vs. Obama on Taxes
Which April 15 would you rather have?

(click to make chart bigger)

The first $5 million ($10 million for a surviving spouse) of an estate would be death tax-exempt

The “marriage penalty” refers to a married couple paying a higher amount of combined income tax than if they each filed taxes as single

The “alternative minimum tax” (AMT) requires taxpayers to calculate their taxes two ways, and pay whichever method results in a higher tax owed

Self-employed taxpayers pay both ordinary income tax and self-employment tax (Social Security and Medicare)

The U.S. corporate income tax is currently the second-highest in the developed world. The average European corporate income tax rate is about 25%

It takes larger businesses several years to deduct machinery and equipment, even though they purchase the business asset in year one (e.g. a computer must be slowly-deducted over six calendar years).

(Hat tip to Jeremiah Films, MyMcCainBlog, Three Sources, PaWaterCooler ) Whew!!

What is the impact of tax increases? The Heritage Foundation comes up with these numbers:

1. $2.4 trillion dollars for the overall tax increase the American families and businesses face if the tax cuts are allowed to expire.
2. $1716 is what the average tax increase will be for over 100 million Americans if the tax cuts are allowed to expire.
3. $2034 is the average tax increase that will hit 17 million seniors if the Bush tax cuts expire.
4. 8.3 million is the number of jobs created after the tax cuts of 2003.
5. $91 billion will be the cost of reinstating the Death Tax.
6. $17.2 billion is the amount of our tax dollars Congress spent in 2008 on frivolous pork projects to reward special interest and pressure groups.
7. 44 million is the number of married couples affected by the Marriage Penalty before it was reduced by President Bush. These families will be hit hard once again if the Marriage Penalty is allowed to be reinstated once again.
8. $1480 The average cost in in the year 2000 for couples punished by the Marriage Penalty.
9. $108 billion is the reduction in the federal deficit in 2005 thanks to economic growth sparked by tax cuts.