The Obama tax plan

August 14, 2008

via Marginal Revolution by Tyler Cowen on 8/13/08


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."?? But before some of you get all upset, I do not intend this presentation as an endorsement of John McCain's utterances on fiscal policy.

Addendum: I am not saying that Obama is "raising taxes on the poor."?? It is about marginal rates and yes marginal rates do matter for incentives.?? This is a genuine problem of many indeed most anti-poverty programs, it is not an attempt to mislead anyone.?? Don't treat everything as necessitating a response to right- or left-wing talking points.?? You still ought to look at this diagram and think that the "notches" are too discrete and too strong.

Second addendum: Here is an Econ4Obama response.

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  1. anthony contratto

    A tax change that would have a huge impact on reviving the housing market would be to eliminate the passive activity rules related to real estate ownership and allow all taxpayers to presently deduct their current losses rather than have them suspended. This would induce capital to return to the real estate market.

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