Wednesday, August 13, 2008

The Obama Tax Plan

As analyzed by Alex Brill and Alan Viard. Click through to read the thousand words, but here is the picture:

Update: Alan Viard asks me to post this note:

Given some confusion on the blogosphere, I want to reiterate that my and Alex' article does not find an increase in average tax rates, or in tax payments, at the income ranges shown in the chart. On the contrary, our article makes clear that Obama's proposed tax cuts would cause average tax rates and tax payments to decline throughout this income range. The point of our article is that Obama's tax cuts are designed in ways that raise marginal tax rates (the extra tax paid on an extra dollar of income) and therefore reduce incentives to earn income. The marginal rate rises because the size of the tax cut falls as income rises. The design of his tax cuts also increases the complexity of the tax system. To avoid confusion, anyone posting our chart should also post (and thoroughly read) our article.

Follow the link above to the article.