[Guest post by DRJ]
Robert Carroll at the Tax Foundation compares the candidates’ tax plans and notices a difference between the statutory tax rates Obama’s plan promises and the effective marginal tax rates his plan will actually produce:
“To the surprise of some, even though Senator Obama’s tax plan lowers taxes for the bottom four quintiles, marginal tax rates would fall only for the very lowest-income couples. Taking both income and payroll taxes into account, those at the very bottom of the income distribution would see their effective marginal tax rates fall from 27.4 percent to minus 58.6 percent due to proposed changes to the earned income tax credit and Senator Obama’s new “Making Work Pay” credit.
Most low- and moderate-income couples would see their effective marginal tax rates rise, in some cases, significantly. Indeed, some low- and moderate-income taxpayers will see their marginal rates rise to more than 50 percent.“
Here’s an example:
“The combination of the phase-out of the EITC, the “Making Work Pay” credit, and the child and dependent care credit pushes the effective marginal tax rate to as high as 51.7 percent. That is, the taxpayer who benefits from all these provisions at a lower income discovers that he gets to keep less than one half of every additional dollar of earnings in the roughly $30,000-to-$43,000 range.“
That should wake up blue-collar voters. Too bad no one will tell them.