The new piece
for Fox News starts like this:
Not all tax cuts are the same. The question isn’t just how much money taxpayers get to keep or are given, but the impact that taxes have on how hard people work. Tax plans that try to help the poor can sometimes become traps, making it difficult for the poor to climb out of poverty.
One approach is to lower the marginal tax rate, the percentage taken for each additional dollar they earn. The other increase tax deductions and credits, but phases them out as people’s income increases.
Take something such as the Earned Income Tax Credit, a program designed to help guarantee the poor a certain level of income. The desire to help the poor is understandable, but it also creates its own problems. Giving more money to people, the poorer they are, also means that the more income these poor individuals make, the more government assistance is taken away from them. Just as higher taxes discourage work, the loss of a significant portion of one’s deductions and credits will also discourage work.
Senator McCain’s proposals have top marginal income tax rates of 35 percent for individuals and 25 percent for corporations, while Senator Obama’s plan has rates of 39.6 and 35 percent respectively. But the official marginal tax rate isn’t the rate that people actually pay because they also lose tax breaks as their income rises. . . .
Labels: Obama, Taxes