In campaigns, the mantra of communicating policy with the average voter is “simpler is better.” But often times, the more “simple” a policy item is, the more unclear it becomes when it comes to actually implementing that policy. If the public wants details, somebody has to push for them.

Barack Obama’s no-tax pitch for some seniors was one of those too-simple proposals. We found that as soon as a senior crossed the $50,000 threshold, his entire income would be taxed at 15%. In this way, the policy acts as a “cliff,” as you can see in the figure below, suddenly slamming the taxpayer with a substantial tax bill. A person earning $51,000 would actually make less after taxes than someone who earned $49,000.

Well, after Foon Rhee of the Boston Globe blogged about it last Friday afternoon, Jason Furman, economic adviser to the Obama campaign, replied by saying that his plan actually includes a $2 billion a phase-out of the tax break, which would be designed later, so that the tax bill would rise gradually above $50,000 in income and there would be no “cliff.”

While we found it good to see that the Obama campaign shed some light on how they would avoid an income tax “cliff” on seniors, much more clarification is needed. The campaign still hasn’t told us whether married and single filers will have the same $50,000 threshold, whether that threshold would be indexed to inflation, etc.

There are other, simpler ways Obama could accomplish his goal of reducing the tax burden of low-income seniors, perhaps by enacting a much larger standard deduction for seniors. That would only change one line on the 1040, and there would be no need for a complicated phase-out.

Over here at the Tax Foundation, our job is not to come up with the best one-liner that can maximize votes; our job is to vet and take a critical look at any tax proposal that comes our way. All candidates, Republican and Democrat, presidential to congressional, are guilty of making policy proposals so simplistic that that they really don’t mean anything. The campaign is getting too old for that – the public needs some details in these next two months.

This entry was posted on Monday, August 25th, 2008 at 4:35 pm and is filed under Uncategorized .