13 August 2008

Obama's Huge Tax Increase

Over at my NewsBusters day job, I linked to an article in The American about the effect of Obama's tax plan on America's marginal tax rates.

As Alex Brill and Alan D. Viard--both economists--show, his "middle-class tax cuts" would actually result in an increase in taxes--especially for the middle class. See the chart below:

h/t: Greg Mankiw

*UPDATE 14 August 3:00pm PST: I just received an email from co-author of the article cited above, AEI Resident Scholar, Alan Viard. He writes:
The article does not find that Obama's plan "would actually result in an increase in taxes--especially for the middle class." As our article makes clear, most people would pay lower taxes under Obama's plan because he would cut taxes for the lower and middle classes.

The point of our article, available at


is that Obama's tax cuts are designed in ways that raise marginal tax rates and therefore reduce incentives to earn income. The marginal rate rises because the size of the tax cut falls as income rises. But, tax payments are lower under Obama's plan (than under current law) at all of the income levels shown in our chart. (emphasis added)

This is an important distinction and I am glad to correct the misconception.

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