The House Committee on Ways and Means amended the Student and Family Tax Simplification Act last Thursday and has issued a comprehensive report on the bill. The bill, or H.R. 3393, was developed by Representatives Diane...
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Obama and McCain Tax Proposals Raise Marginal Tax Rates for Many Middle-Income Taxpayers
Marginal tax rates will rise to over 50 percent on some middle-income families if Sen. Obama's tax plan becomes law, and over 40 percent under Senator McCain's plan, according to a new report from the Tax Foundation.
The report is Tax Foundation Fiscal Fact No. 150, "How Do the Presidential Candidates' Tax Plans Affect Taxpayers' Marginal Tax Rates?" by Robert Carroll, Ph.D., vice president for economic policy at the foundation. Carroll illustrates his point with a family of four—two working adults with two children—and explains the economic importance of "marginal" tax rates and why they can differ dramatically from statutory tax rates. Carroll explained:
Senator Obama's new and expanded tax credits for low-income taxpayers will certainly cut taxes for low-income people, but the credits are mostly recaptured from middle-income taxpayers. During this phase-out range, marginal tax rates shoot up, causing economically damaging side effects. As a result, for example, a family of four in the $30,000-to-$43,000 range would discover that for every additional dollar they earn, they pay more than 50 cents in income tax.
Read the new Tax Foundation Fiscal Fact. Click here for more analysis of the presidential candidates' tax plans, and here to compare specific provisions of the tax plans of McCain, Obama, Bob Barr (Libertarian Party), Chuck Baldwin (Constitution Party), Cynthia McKinney (Green Party), and Ralph Nader (independent).
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