Obama Details Raising Taxes on Gains, Dividends

[DeepModem Mom]

WSJ: Obama Details Raising Taxes on Gains, Dividends
Plan Would Expand Payroll Levy on Some High-Wage Earners
By DEBORAH SOLOMON
August 15, 2008; Page A4

Democratic presidential contender Barack Obama sought to quiet critics by offering specifics about his tax plan, but his proposal to raise tax rates on investment income and expand payroll taxes is continuing to draw fire from some who say it will harm workers and the economy.

Sen. Obama outlined a plan Thursday to raise tax rates on capital gains and dividend income from 15% to 20% for individuals and families making more than $200,000 and $250,000, respectively. He also detailed a plan to levy payroll taxes on earnings above $250,000 at a rate between 2% and 4%, though that increase wouldn't occur for at least a decade. Right now, payroll taxes, used to fund retirement benefits, are levied on income up to $102,000.

Jason Furman, Sen. Obama's economic-policy director, said the plan would cut taxes to less than 18.2% of gross domestic product. "That's lower than the level of taxes when Ronald Reagan was president," he said.

The proposed rates are below the levels many had expected, given Sen. Obama's campaign rhetoric. Nonetheless, critics said the plan would exacerbate an economic downturn and harm workers....

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The Obama campaign called on former Clinton administration Treasury Secretary Lawrence Summers to defend Sen. Obama's plans. "At a time when the 10-year interest rate is in the three's, at a time when it is clearly lack of demand for products rather than the cost of capital that is inhibiting investment, the idea that a return to the tax policies of the 1990s would somehow damage the economy in a substantial way seems to me supported by neither theory nor evidence nor the longer-term history," Mr. Summers said....

http://online.wsj.com/article/SB121876400087343173.html