Fun With Math (Greg Mankiw Style)

The Wall Street Journal today has a graph comparing current tax rates with proposed rates under a McCain and Obama administration.

First, while the chart is not completely misleading, its simplicity leads the reader to conclude that while most people will not pay the highest income tax rate, we will all pay 20% on capital gains and dividends. This, of course is not true even under the current law, under which a couple making up to $65,100 pays no taxes on capital gains. This would not change under an Obama administration, and indeed capital gains exemptions would be expanded further, specifically to small businesses.

Second, the estate tax exemption under Obama would double, from $3.5 million in 2009 to $7 million.

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