President Barack Obama's demand that “millionaires and billionaires” be taxed at a higher level is translating into a tax hike for those earning far less. In his proposals, Obama has defined those terms to include households with an annual income above $250,000.
It seems Obama's “millionaires' bracket” includes families with just one-fourth that income. But in all fairness, Obama isn't the first policymaker to use that bait-and-switch tactic. Several states' top income-tax brackets also include people with thoroughly middle-class earnings — or lower.
The Tax Foundation notes those earning over $200,000 in Hawaii land in a top bracket with an 11-percent tax rate. Oregon's top rate of 9.9 percent applies around $125,000. In Iowa, those earning over $66,105 face an 8.98-percent tax rate, while those earning more than $20,350 in Maine are in the top 8.5-percent tax bracket. This year, California's second bracket applied a 9.3 percent rate to income of just $48,029, while Oregon's second tax tier was a 9-percent rate for income as low as $7,750.
Oklahoma's top rate is far better — just 5.25 percent — but it kicks in at $8,700 (or $15,000 for married couples). In Oklahoma, you can qualify for welfare and still land in our millionaires' bracket. And there are six brackets below that.
The Oklahoma Policy Institute, which generally opposes tax cuts and supports increased government spending, has endorsed reform, including raising the personal exemption and stretching out and indexing the tax brackets so more low-income people are taxed at a lower rate.
Those changes might not have much pro-growth benefit, but they deserve support simply to make Oklahoma's tax code less punitive for the poor. Such changes would not be necessary but for one fact: At both the state and federal level, calls to “tax the rich” inevitably lead to higher taxes for working families.