August 22, 2008
After Tax Foundation Releases Analysis, Obama Campaign Clarifies Tax Relief Plan for Seniors
Washington, DC, August 22, 2008 - The presidential campaign of Sen. Barack Obama today clarified its proposal to eliminate all income taxes for seniors making under $50,000, after a new economic analysis from the Tax Foundation criticized the plan for being nearly impossible to implement.
In Tax Foundation Fiscal Fact No. 140, "Obama's Income Tax Cliff for Senior Citizens," Tax Foundation analyst Mark Robyn examined the presumptive Democratic presidential nominee's plan to provide some relief to low-income seniors, and found that Obama's plan 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, suddenly slamming the taxpayer with a substantial tax bill and reducing his after-tax income well below what it would have been if his income had never increased.
After Foon Rhee of the Boston Globe reported Robyn's analysis on his blog, "Political Intelligence," the Obama campaign responded by 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."
"[Obama campaign] economic adviser Jason Furman said while there's no specific proposal, Obama's plan includes $5 billion for the tax break," Rhee reported, "plus another $2 billion for the phase-out, which would be designed later."
Robyn welcomed the clarification from the Obama campaign, yet made clear that any phase-out would raise the marginal tax rate for some senior taxpayers.
"While it is good to see that the Obama campaign shedding some light on how they would avoid an income tax 'cliff' on seniors," Robyn explains, "this means that those senior taxpayers making just over $50,000 will see an increase in their marginal tax rate."
Robyn's analysis can be found at http://www.taxfoundation.org/publications/show/23525.html.
The Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.
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To set up an interview to discuss Sen. Barack Obama's tax relief plan for senior citizens or more parts of any candidates' tax policies, please contact Matt Moon, the Tax Foundation's Manager of Media Relations, at (202) 464-5102.
