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Joan Crawford wrote:

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PALIN: "The Democratic nominee for president supports plans to raise income taxes, raise payroll taxes, raise investment income taxes, raise the death tax, raise business taxes, and increase the tax burden on the American people by hundreds of billions of dollars."

THE FACTS: The Tax Policy Center, a think tank run jointly by the Brookings Institution and the Urban Institute, concluded that Obama's plan would increase after-tax income for middle-income taxpayers by about 5 percent by 2012, or nearly $2,200 annually. McCain's plan, which cuts taxes across all income levels, would raise after tax-income for middle-income taxpayers by 3 percent, the center concluded.

Obama would provide $80 billion in tax breaks, mainly for poor workers and the elderly, including tripling the Earned Income Tax Credit for minimum-wage workers and higher credits for larger families.

He also would raise income taxes, capital gains and dividend taxes on the wealthiest. He would raise payroll taxes on taxpayers with incomes above $250,000, and he would raise corporate taxes. Small businesses that make more than $250,000 a year would see taxes rise.

Pro-Obama Youth Should Be Careful What They Wish For

by Michael D. Tanner

Michael D. Tanner is a senior fellow at the Cato Institute.

The sea of young people we'll see cheering Barack Obama's speech in Denver Thursday night is just a tiny slice of a nationwide movement. According to a recent poll by Harvard University's Institute of Politics, Obama leads John McCain by an astonishing 23 points, 55% to 32%, among voters younger than 25.

It is easy to see why. Obama is young. He seems to brim with hope and optimism. He "gets" 21st century culture. In contrast, John McCain is old, very old, and more than a little bit cranky. Heck, he's even unfamiliar with the Internet.

Yet if you look at the policies advocated by the two candidates, Obama's appear almost perversely designed to hit those young supporters in the pocketbook.

Looking at how voters in one state repeatedly voted against their economic interests, one political scientist asked, "What's the matter with Kansas?" With respect to young voters and Obama, we might pose this question: "What's the matter with kids today?"

Take health care, for example. Obama supports an idea known as "community rating," a requirement that insurers must charge everyone the same premium regardless of their health status. That means young and healthy people will pay the same premium as older and sicker people. Essentially, those high premiums on young people will be subsidizing the premiums for older people.

Moreover, Obama would prohibit low-cost, high-deductible policies, and would insist that every insurance policy include all sorts of costly benefits. These regulations will, on balance, make it much harder for young people just starting out in their first jobs to afford insurance.

No government program treats young people worse than Social Security. Social Security taxes are already so high, relative to benefits, that the program has simply become a bad deal for younger workers, providing a low, below-market rate of return. In fact, over the course of their careers, many young workers will end up paying more in taxes than they receive in benefits.

Worse, the program is facing future unfunded obligations in excess of $15.3 trillion. This means young people will face either massive future tax increases or benefit cuts when it comes time for them to retire.

Yet Obama - who just a few months ago took justifiable pride in his willingness to keep all options on the table - now opposes both benefit cuts and allowing younger workers to privately invest even a small portion of their Social Security into personal accounts that can build value over time.

Medicare's anticipated future debt is even greater, an astounding $70 trillion by some estimates. Yet Obama not only opposes most Medicare reform proposals, he actually wants to increase benefits under the Medicare prescription drug program. That is yet another cost that will be passed along to young voters.

According to the Congressional Budget Office, unless spending is brought under control, the federal government will eventually consume as much as 35% of our GDP. Paying for a government that size would require raising both the corporate tax rate and top income tax rate from their current 35% to 88%, the current 25% tax rate for middle-income workers to 63%, and the 10% tax bracket for low-income workers to 25%. The impact on workers, businesses and the economy at large would be catastrophic.

Far from restraining the growth of government, Obama is proposing program after program of new spending. According to the most recent tally from the National Taxpayers Union, he has laid out $343 billion per year in new government spending.

Yes, Obama may end the war in Iraq sooner than John McCain - but there is no end in sight to these other federal spending commitments.

Barack Obama has brought millions of young people into the political process. He has given them belief in a better tomorrow. He owes them something more: policies that will actually make our fiscal future more secure.

European Levels of Taxation: Barack Obama's Tax Plan

by Rea S. Hederman, Jr. and Patrick Tyrrell

Note: Representatives of the Obama campaign have informed the authors that the campaign is not committed to the full 12.4 hike in the payroll tax. An increase in the payroll tax is merely one of many different tax increases that are being considered for those making over $250,000. The Obama campaign implies that the tax increase on those earning over $250,000 may not be limited to earnings but also cover different types of income. Despite questioning, the campaign has not provided any more details.

Presidential hopeful Senator Barack Obama (D-Ill.) has unveiled his economic plan of raising taxes on the successful. His plan would boost the top marginal rate to well over 55 percent-before the inclusion of state and local taxes-resulting in many individuals seeing their marginal tax rate double. The consequences of this policy would be a return to the bad old days of tax avoidance, with taxpayers disguising personal income as business income or capital gains and the migration of capital from the United States to abroad.

Among the more prominent elements of his tax proposal, Senator Obama would end the Bush tax cuts and allow the top two tax rates to return to 36 and 39.6 percent. He also would allow personal exemptions and deductions to be phased out for those with income over $250,000. The real kicker, though, is that Senator Obama would end the Social Security payroll tax cap for those over $250,000 in earnings. (The cap is currently set at $102,000.) These individuals will then face a tax rate of 15.65 percent from payroll taxes and the top income tax rate of 39.6 percent for a combined top rate of over 56 percent on each additional dollar earned.

High-income individuals will be forced to pay even more if they live in cities or states with high taxes such as New York City, California, or Maryland. These unlucky people would pay over two-thirds of each new dollar in earnings to the federal government.

How the Obama Tax Plan Compares to Other Countries

Senator Obama's new tax rate would give the United States one of the highest tax rates among developed countries. Currently only six of the top 30 industrial nations have a tax rate for all levels of government combined of over 55 percent. Under this tax plan, the United States would join this group and have a higher top rate than such high-tax nations as Sweden and Denmark. The top marginal rate would exceed 60 percent with the inclusion of state and local taxes, which means that only Hungary would exceed Senator Obama's new proposed top tax rate.

The costs in economic terms of such high taxes are real. For example, of the six countries with higher tax rates than 55 percent, the average unemployment rate is 7.35 percent (see chart). This figure includes Denmark, which appears to have a very low unemployment rate of 3.9 percent. However, Denmark spends over 5 percent of its GDP on unemployment programs and benefits, thereby increasing its unemployment rate.

A Return to the Bad Old Days

Historically, Senator Obama's tax rate would be the highest individual tax rate since the Jimmy Carter days. Tax shelters and tax avoidance strategies were common when the top marginal rate was 70 percent or higher. This new top tax rate will again encourage these gimmicks, reducing investment and economic growth as resources are squandered in an attempt to avoid punitive taxation.

Many individuals will attempt to transfer their compensation from wages to capital gains, since capital gains would only be taxed at 25 percent, or less than half of the top rate on wages. This would put a great deal of pressure on a company to do anything it could to make its stock quickly increase in value. Other individuals would try to incorporate so they could pay business taxes instead of having to pay taxes on their wages. Again, these resources would be diverted away from more productive uses and slow the economy.

Stall that slide to the '70s

by Edwin J. Feulner, Ph.D.

There aren't many who long for a return to the 1970s. Those of us old enough to recall that decade tend to think of gas lines, a hostage crisis and Watergate. President Jimmy Carter never used the word "malaise," but he acted as if America was doomed to decline, and it was his job to make sure it went smoothly.

There's some malaise around today, too.

High gasoline prices are back. Petroleum-producing nations (such as Venezuela, Iran and Saudi Arabia) again hold us hostage -- this time for petro-dollars, even as the value of our currency slides. And polls show both the president and Congress have their lowest approval ratings in decades.

With so much discontent, who would want to go back to the policies of the 1970s? None other than the self-professed presidential candidate of "change," Barack Obama.

Sen. Obama recently unveiled an economic plan that revolves around raising taxes on the wealthy. His plan would jack up the top marginal rate to roughly 50 percent for those making more than $250,000 a year. And that doesn't include state and local taxes.

Obama promises to "soak the rich" three times over by 1. repealing the Bush tax cuts on capital gains and dividends; 2. bumping the top two tax rates back up to 36 and 39.6 percent; and 3. slapping them with additional Social Security taxes. The total tax pain would be greatest for those who live in high-tax cities and states, including New York, Maryland and California. Some there would have to pay up to 66 cents in taxes on every new dollar they earn. Confiscatory tax rates like that only encourage high earners to work less and produce less.

Those sort of tax rates would take us right back to the Carter era. That's the last time rates were that high.

Of course, when tax rates are high, wealthy people spend their time developing tax shelters instead of reinvesting in their businesses. That may be great news for lobbyists and tax attorneys, but it's bad news for everyone else.

It was a true "candidate of change" who rescued the U.S. from the doldrums of the '70s. "Reaganesque lower taxes and deregulation," economic historian John Steele Gordon wrote in The Wall Street Journal recently, "sparked an enormous economic boom that has now lasted, with two brief and shallow recessions, for more than 25 years."

The rest of the world learned Reagan's lesson, too. Most countries slashed tax rates after we did, and generated growth of their own. By reversing that policy, Obama would put the U.S. in with an ever shrinking group of nations that cling to the failed policies of the past, and are suffering for it.

Only six of the top 30 industrial nations have a tax rate for all levels of government combined that adds up to more than 55 percent. Obama's tax plan would give us a higher top rate than such high-tax nations as Sweden and Denmark. And these sorts of tax rates slow the economy.

Among those six high tax countries the average unemployment rate is 7.35 percent. Contrast that with our own unemployment rate, which recently rose to 5.5 percent still a low figure by historic standards.

The math is simple: Lower tax rates encourage more economic growth and lower unemployment. Higher tax rates lead to slower growth and lower wages. In 2001 and 2003, President Bush pressed Ronald Reagan's tax-cutting policies even further, slashing tax rates and boosting the economy into several more years of growth. The sensible policy today would be to make those cuts permanent, so business owners and entrepreneurs could plan for the future.

The only other option is a return to the discredited policies of the '70s. And that's a change we simply can't afford.