more tax cut questions- bush speech

[Nathan Newman]

The math is not exact but the basic ballbark is right.  The bottom line is
that the $25,000 per year waitress-mom earns a dollar, but only gets to
spend about another 50 cents on groceries or whatever.   After-tax gains
from a raise is what matters for most people.

As Doug's Urban League comment notes, the waitress-mom in question won't
actually benefit.

Now, while this is not as important and crucial a lie as Gore's occasional
misstatements - since it is only about the core of Bush's policy - I don't
expect the media to run a multi-day media firestorm around it.

But it would be nice.

Nathan Newman

----- Original Message -----
From: <christian11 at mindspring.com>
To: <lbo-talk at lists.panix.com>
Sent: Wednesday, February 28, 2001 3:24 PM
Subject: Re: more tax cut questions- bush speech

Nathan wrote:


>Yes, they are. You are forgetting about the EITC phaseout, which would
still be at 20% for a single Mom with two kids at $25,000.  She would face:

EITC Phaseout-             20%
Income Tax-                  15%
FICA (inc. empl side)     15%
------------------------------
Total                               50%
>

For anyone with more than one claimed child, the phaseout is at $31,152,
according to IRS website.

Still, isn't W doing fuzzy math? Phasing out EITC when you make $25,000 (or
31K) isn't the same as adding 20% to your marginal tax rate above that. Even
with EITC, you are not exempt from taxation: it simply lowers your paid
taxes. It might lower your actual rate by 20%, but it can't lower your
marginal rate that much. So adding 20% to the marginal rate above that is a
pretty un-deft sleight of hand.
(BTW, your credit is based on adjusted gross income, which, from what I can
tell, is a bit more complicated than simply taking 20% off the top of your
tax bill anyway.)

Christian