The Tax Foundation's hit job on Obama
I respect the Tax Foundation. They do some good work. I frequently make use of their research. But their "analysis" of Obama's proposal to exempt senior citizens making less than $50,000 a year from income tax seems disingenuous. Obama's proposal is a bad idea, but not for the reasons the Tax Foundation gives. The Foundation's Mark Robyn said that, "as stated in his official campaign publications," Obama's plan would instantly make all seniors' income liable for tax as soon as they made more than $50,000, even if it was $50,001. I quote Robyn:
The reason this happens is that Obama's plan, as stated in his official campaign publications, throws taxpayers directly into the 15% bracket as soon as they cross the $50,000 threshold, making them fully liable for income tax on all of their taxable income (around $29,000 for seniors after the standard deduction and personal exemptions).
Nobody would create tax law this way, and this is not what Obama proposed. The U.S. income tax system is composed of brackets, and in each higher bracket only the marginal income is taxed at the higher rate. Single filers pay 15 percent on income between $8,026 to $32,550. The next bracket is 25 percent. If you make $32,600, does that mean you have to pay 25 percent on the whole $32,600? No, only on the last $50. Obama's plan would work in a similar way, taxing seniors' income below $50,000 at zero with some kind of phase-in tax for income above that.
I asked Tax Foundation spokesman Matt Moon for the evidence, supposedly from the Obama campaign itself, that the candidate would throw seniors into the 15 percent bracket for all income after they crossed 50K.
Moon's reply:
The whole point of Mark's analysis, which you can find here: http://www.taxfoundation.org/publications/show/23525.html, is that Obama does not include the crucial details about whether or not there would be a phase-out. Mark is not saying that the Obama plan, which is here: http://www.barackobama.com/issues/pdf/FactSheetSeniors.pdf specifically states that they're placing those above the $50K threshold in the 15% bracket; he's saying that a plain reading of Obama's campaign plan makes no mention of a phase-out, which therefore assumes that there would be an "income tax cliff."
"Mark is not saying that the Obama plan... specifically states that they're placing those above the $50K threshold in the 15% bracket."
That's exactly what Mark is saying. Go read it. The Tax Foundation misrepresented Obama's plan, and it's hard not to believe it was intentional. They took a blurb from a campaign brochure and treated it like the definitive statute. The Boston Globe blogged about the Tax Foundaton piece today and later added this clarifier:
UPDATE: The Obama campaign disputes the Tax Foundation's analysis, saying that his plan does actually include a phase-out of the tax break, so that the tax bill would rise gradually above $50,000 in income and there would be no "cliff."Economic adviser Jason Furman said while there's no specific proposal, Obama's plan includes $5 billion for the tax break, plus another $2 billion for the phase-out, which would be designed later.
Of course.
Comments
I would like to see a policy targeted at truly poor seniors with no major assets,who live from check to check. They
shouldn't be given actual payments, beyond a stimulus check, but they should be allowed to declare, on a simple IRS (short form declaration that their income is less than $20,000 including all taxable earnings &SSA
payments for the year. I'm one of these poor folks, and also seriously disabled. Still I can drive other folks,
answer phones in a "slow" rental office, fix things, and sell things at flea markets, or farmers markets from a garden, etc. $5 to $8000 a year extra would cost taxpayer nothing, and allow me to cover co-payments, buy
sanitary new shoes, see a movie , once in a while, and even support a
pet with food and vet expenses. Have
a heart...our real dollar income is only half what it was in 2000, when you consider inflation, and the mini C.O.L.A.s granted each year since then.
Posted by: Allanthevet | February 14, 2009 5:23 AM