Monday, August 04, 2008

Taxes clear as mud 

I was going to write about Michael Boskin's earlier editorial on Obamanomics, but today he has published a revision. In short, it's better than what he published before because the Obama campaign keeps clarifying statements that are hard to decipher. But you still have to be careful, as the Tax Foundation has recently pointed out. So for example, if you assume that Obama will only raise Social Security taxes by 4% on incomes above $250k rather than 12.4% as originally thought, and you do that calculation for Minnesota rather than California, you find that Obama would raise taxes on labor income above $250,000 to 52.44% from 43%, a 16.5% decline in the after tax wage for high-income earners. Boskin's numbers find for a 32% decline. Note that this number is quite like the number for the decline in after-tax returns on dividends and capital gains (where, outside using California's abusive state tax rate on capital gains, there is no difference between the numbers.)

For those of us without a lot of deductions and therefore using the standard, if you believe that Obama will only take us back to the Clinton-era tax law, here's a chart that tells you how much more you pay. But as Boskin notes, it's not even that good -- Clinton signed off on a capital gains tax of 20%, but Obama wants to take us back to 28% ... at least until he clarifies again.

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