Friday, August 22, 2008

Morning Wonkery

Paul Krugman gives a nice analysis of the differences between Obama's tax plan and Bush's McCain's in his column today.

You might already have a sense that you're likely to prefer Obama's plan if you're not rich -- and by "not rich" we don't just mean scraping by on anything less than $5 million/year -- since McCain's plan starts out by preserving all of the Bush tax cuts for the wealthy, but there are some interesting details. Here's one that I didn't know (emph. added):

According to estimates prepared by the nonpartisan Tax Policy Center, those Obama tax increases would fall overwhelmingly on people with incomes of more than $200,000 a year. Are such people rich? Well, maybe not: some of those Mr. Obama proposes taxing are only denizens of lower Richistan, although the really big tax increases would fall on upper Richistan. But one thing’s for sure: Mr. Obama isn’t planning to raise taxes on the middle class, by any reasonable definition — even that of the Bush administration.

O.K., the Bush administration hasn’t actually offered a definition of “middle class.” But in May, the Treasury Department — which used to do serious tax studies, but these days just churns out Bush administration propaganda — released a report purporting to show, by looking at the tax bills of four hypothetical families, how the middle and working class would be hurt if the Bush tax cuts aren’t made permanent.

And when the Center on Budget and Policy Priorities looked at the report, it made an interesting catch. It turns out that Treasury’s hypothetical families got all their gains from the so-called middle-class provisions of the Bush tax cuts: the Child Tax Credit, the reduced tax bracket for lower incomes and marriage penalty relief.

These all happen to be provisions that Mr. Obama proposes leaving in place. In other words, the Bush administration itself implicitly defines the middle class as consisting of people making too little to end up paying additional taxes under the Obama plan.

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