The Homa Files

I’m now completely convinced that neither Sen. Obama nor anybody else understands what’s in his tax plan — the mathematics — and the implications.

For example, he told Joe the Plumber that his taxes would only go up 3% in order to “spread the wealth”.

Let’s start with the marginal tax rate for folks making more than $250,000.

Obama says that it will go back to what it was under Bill Clinton. OK, in 1999, the top bracket started at $283,150 (for both individuals and marrieds filing jointly) — the rate was 39.6%.

For 2008, the top bracket starts at $357,700 (for both individuals and marrieds filing jointly) — and the marginal tax rate is 35%. Note that it’s 35% — most politicos are running around saying it’s 36% — not true.

So, the top bracket marginal rate increase under Obama’s plan is 4.6 percentage points (from 35% to 39.6%) which is a 13% increase in the marginal rate (4.6% / 35% = 13%).

In 2008, the 2nd highest bracket starts at $200,301 for marrieds — with a marginal rate of 33%. For those folks, the increase is 6.6 percentage points (from 33% to 39.6%) which is a 20% increase in the marginal tax rate.

There’s a big difference between 3% and 13%, and a bigger difference between 3% and 20%. Shouldn’t somebody mention this to both Joe and Barack ?

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This entry was posted on October 20, 2008 at 7:58 am and is filed under Government & Politics, Taxes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.