A RECIPE FOR RECESSION

If the proposals espoused by candidate Obama ever became law, the American economy would suffer a serious setback, says Michael J. Boskin, a professor of economics at Stanford University and senior fellow with the Hoover Institution. [snip]

• The top 35 percent marginal income tax rate rises to 39.6 percent; adding the state income tax, the Medicare tax, the effect of the deduction phase-out and Obama's new Social Security tax (of up to 12.4 percent) increases the total combined marginal tax rate on additional labor earnings (or small business income) from 44.6 percent to a whopping 62.8 percent.

• People respond to what they get to keep after tax, which the Obama plan reduces from 55.4 cents on the dollar to 37.2 cents -- a reduction of one-third in the after-tax wage!

Despite the rhetoric, that's not just on "rich" individuals, explains Boskin. It's also on a lot of small businesses and two-earner middle-aged middle-class couples in their peak earnings years in high cost-of-living areas. His large increase in energy taxes would disproportionately harm low-income Americans. And, while he says he will not raise taxes on the middle class, he'll need many more tax hikes to pay for his big increase in spending.

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