Reader Mailbag: Various Questions

A reader writes in the following:

If you have the time, can you point me to anything that talks about the following:

1. Obama wants to raise taxes on big employers and "spread the wealth around." That leads to higher unemployment - obviously not what America needs right now.

2. Obama wants to give tax credits to people currently not paying income tax - thus creating a disincentive for people to work harder since they lose credits as their income rises. We need to be growing our economy, not shrinking it!

3. I bet most Obama supporters can't name a single tax that Obama is saying he is cutting.

4. “…A complete credit quagmire, thanks to Democratic friends of Fannie Mae and Freddie Mac on the hill (including Obama) trying to appeal to their narrow voting bloc rather than focus on what was right for America.

My quick response:

This is a good article on the two tax plans, by Obama's advisers.

A general reply to these points is that Obama would return tax rates to something like what we had in the 90s, an era of great prosperity and growth. In contrast, the McCain approach--lowering taxes on the wealthy and corporations--is what we had over the last 8 years, when wages for the typical American fell.

On your second point, see these two posts:
http://econ4obama.blogspot.com/2008/10/obamas-95-illusion-revisited.html
http://econ4obama.blogspot.com/2008/10/obama.html

Marginal rates (meaning the tax rate people face on their next dollar of income) would decline for most people under Obama's plan.

Obama will cut taxes for 95% of working Americans. I'm not sure what "name a tax he will cut" is supposed to mean. He will cut income taxes. See the links on the left bar of our site.

On the 4th point, there are many analyses that point out that by the time Fannie and Freddie got into the subprime business, the housing bubble was already near its peak. So it's not possible that they are a primary cause of the bubble and crisis. Here is a good discussion of this issue.