Jason Furman and Austan Goolsbee fill in some of the details of Barack Obama's tax plan in their op-ed in today's Wall Street Journal. There's lots of stuff in there that's of interest: They point out that John McCain, unlike Obama, offers no tax relief at all to a huge chunk of the working class. (Indeed, Obama's tax plan is better for the bottom 80 percent of Americans on the income ladder, despite McCain's outright lies about Obama's proposals.) Furman and Goolsbee also note that under Obama's plan, federal tax revenue would be only 18.2 percent of GDP, less than it was during that noted era of oppressive taxation, the 1990s. But the point that deserves perhaps the most emphasis is this:
Sen. Obama does not support uncapping the full payroll tax of 12.4% rate. Instead, he is considering plans that would ask those making over $250,000 to pay in the range of 2% to 4% more in total (combined employer and employee). This change to Social Security would start a decade or more from now and is similar to the rate increases floated by Sen. McCain's close adviser Lindsey Graham, and that Sen. McCain has previously said he "could" support.
Conservatives have seized on Obama's payroll tax rhetoric to claim that he does support uncapping the full payroll tax rate, which would result in "European levels" of taxation, with marginal rates in excess of 55 percent. This is simply not true--Obama isn't proposing anything approaching European tax rates. You'd think conservatives would be able to tell the difference between a modest tax increase on a small group of increasingly propserous people and a wholesale reversion to the confiscatory pre-Reagan marginal rates, but apparently they lack either basic mathematical proficiency or intellectual honesty.
Update: The author of the Heritage paper I link to writes in comments that his reference to "European levels" of taxation referred only to top marginal rates, not to overall taxation as a percentage of GDP (the table I linked to above). Fair enough. Here's the most recent chart I can find after some quick Googling of top marginal rates by country [Update II: Found newer chart, from 2005]. It still looks to me like under Obama's tax proposal, the top marginal rate in the U.S. would be well below the top marginal rate in most Western European countries.