Obama’s Tax Policies

Marginal Tax Rate On Earnings                                                                  Current                                Obama

Top Federal Rate                                                                                             35.0%                    39.6%

+State Income Tax Rate (California)                                                        10.3%                    10.3%

+Phase Out of Itemized Deductions                                                                                        1.2%

=Combined Marginal Rates Net Of Any Deductibility (t)                                41.7%                    47.0%

+Medicare Tax                                                                                                  2.9%                      2.9%

+Additional Social Security Tax above $250,000                                                                 12.4%*

=Combined Total Marginal Tax Rate (t)                                                  44.6%                    62.3%

After-Tax Return Per Dollar of Earnings (=1-t)                                    55.4%                    37.7%

Percentage Change                                                                                                                        -32.0%

Marginal Tax Rate On Dividends And Capital Gains**

(Capital Gains Not Related To Corporate Income In

Parentheses)                                                                                    

Corporate Rate                                                                                                 35.0%                    35.0%

Federal Rate: Ordinary Income                                                                 35.0%                    39.6%

                                Dividend/Captial Gains                                                 15.0%                    28.0%***

State Income Tax Rate                                                                                   10.3%****           10.3%****

Phase-Out Of Itemized Deductions                                                         -------                    1.2%                     

Combined Marginal Rate*****                                                                  49.1% (21.7%) 58.0% (35.4%)     

After-Tax Return Per Dollar                                                                        50.9% (78.3%) 42.0% (64.6%)

Percentage Change                                                                                        -18.1%                  (-17.5%)

*Under the Obama plan, the additional Social Security tax above $250,000 could be as high as 12.4%  If Obama states a different rate, adjust the figures.

**Must be adjusted for the advantage of deferral and the disadvantages of limited loss offset and no inflation indexing.

***”No more than Regan”, which was 28%. If he states a different rate, plug new figure into formula.

****In California, capital gains are taxes at the ordinary income rate, 10.3%.

*****Equals corporate rate plus (one-corporate rate) times the sum of the other rates net of deductibility.