Howard Gleckman of TaxVox has written a brief summary of President Obama’s core tax proposals. My only objection, and it is a minor one, is that Gleckman’s post doesn’t give a very clear sense of the implications of the president’s tax proposals for effective marginal tax rates. The obvious reason is that it is actually very hard to generalize, as effective marginal tax rates will depend on sources of income, etc., so we can hardly hold it against him. But I think it is helpful to note that the effective marginal tax rates for high-earners will be in the neighborhood of 40.8 and 43.7 percent when we factor in the phase-out of itemized deductions and the new Medicare tax.
I mention this because it helps illustrate why maintaining the current top marginal tax rate of 35 percent while curbing deductions might be a good basis for a compromise, as the effective marginal tax rate under such a scenario would be somewhat higher, e.g., 36 or 37 percent, depending on the design of the cap.