Fair tax policy

To the editor:

Once again it appears the presidential election will be determined by our perception of income tax rates. Sen. Obama wants to increase taxes on those in the highest income bracket while Sen. McCain wants to reduce taxes for them.

According to the Internal Revenue Service, during 2007, taxable income above $349,700 for married filing jointly and individuals were taxed at a rate of 35 percent. Taxable income between $128,500 and $195,850 for married filing jointly ($77,100 and $160,850 for individuals) were taxed at a rate of 28 percent.

What these tax rates do not show is the 12.4 percent of income workers pay for FICA tax. The employee pays 6.2 percent, and the employer pays 6.2 percent of income up to a maximum of $102,000 in 2008. FICA tax is not paid on income over $102,000. Therefore the real tax rate for the 28 percent bracket is actually 40.4 percent compared to the 35 percent rate for highest incomes. This is not a fair tax policy.

In 1981, the tax rate for the highest taxable income was 70 percent. During President Reagan’s administration this tax rate was reduced to 33 percent, and when President George H. W. Bush left office in 1992 it was 31 percent. President Reagan’s “trickle down” theory did not work, and the results were the largest budget deficits of any prior presidents.

A fair tax policy is needed. Obama is on the right path.

Charles Pauls,
Lawrence