Obama lays out plan for tax cuts

Sen. Barack Obama yesterday proposed tax cuts of up to $85 billion for 150 million Americans by raising taxes on investors and those with the highest incomes.

“We shouldn’t be distorting our tax code to benefit a few powerful interests,” the Illinois Democrat and 2008 presidential candidate said in a speech at the Brookings Institution laying out his proposals. “We should be insisting that everyone pays their fair share, and when I’m president, they will.”

Mr. Obama’s plan would eliminate income taxes for senior citizens who make less than $50,000 a year and provide a tax credit of up to $500 per person or $1,000 per family. He also would create a mortgage tax credit of 10 percent of interest payments.

To pay for it, Mr. Obama proposed eliminating tax breaks for those making more than $250,000, or the top 2 percent of Americans, and increasing taxes on capital gains and dividends from the current 15 percent to as high as 28 percent.

Some facets of Mr. Obama’s plan are similar to those released in July by one of his competitors for the Democratic presidential nomination, former Sen. John Edwards of North Carolina.

“Senator Edwards believes this is an issue of fairness — those at the top should pay their fair share, instead of making hard-working families bear most of the burden,” said Eric Schultz, spokesman for the Edwards campaign. “But we also think when it comes to selecting a president, specifics matter, and we look forward to seeing what tax rates Senator Obama proposes.”

Republican National Committee spokeswoman Lisa Miller was wary of Mr. Obama’s plan.

“In their ‘08 budget proposal, Obama and his Democrat colleagues are proposing the largest tax increase in the history of our country, but while on the campaign trail he promises $80 billion in relief,” she said. “Which Obama should we believe?”