Obama promotes middle-class tax cut

Barack Obama will highlight his middle-class tax cuts during an event today in Wisconsin, a potential battleground state in November.

Obama is talking to Ryan and Jenny Micke of Appleton. With two kids, Ryan is a unit director with the Boys and Girls Club at the local middle school and Jenny works as an educational assistant at a nearby preschool. With a combined income of less than $40,000 year and $120,000 left on their mortgage, they live paycheck to paycheck and work hard to make ends meet, the Obama campaign said.

The presumptive Democratic nominee will go in armed with a study that suggests that his proposals would give families making between about $38,000 and $66,000 a year an average tax cut of $1,042 -- three times more than the $319 in savings they would get from the tax cut plans of Republican John McCain.

The savings in 2009 would be closer for families making between $66,000 and $112,000 a year -- $1,290 under Obama's plan and $1,009 under McCain, according to the Tax Policy Center , a nonpartisan research initiative of the Urban Institute and the Brookings Institution in Washington.

The biggest gap would be for the 0.1 percent of taxpayers with incomes of more than $2.9 million a year. They would pay $270,000 less under McCain, but pay $702,000 more under Obama.

Both plans, however, would dramatically increase the federal deficit, the study found.

Obama's proposals include a tax cut of $500 per person or $1,000 per couple for most families, but letting President Bush's tax cuts lapse for those making $200,000 or more a year and raising the capital gains tax rate.

McCain wants to make Bush's tax cuts permanent and also double the deduction for children and eliminate the alternative minimum tax.

UPDATE: Meanwhile, McCain, who supports a summer-long suspension of the federal gas tax, is trying to capitalize on Obama's remarks that a "gradual" increase in prices at the pump could encourage a badly needed change in US energy policy.

Asked on CNBC about whether high prices could end up helping, Obama replied, "I think that I would have preferred a gradual adjustment. The fact that this is such a shock to American pocketbooks is not a good thing. But if we take some steps right now to help people make the adjustment, first of all by putting more money into their pockets, but also by encouraging the market to adapt to these new circumstances more quickly, particularly US automakers, then I think ultimately, we can come out o f this stronger and have a more efficient energy policy than we do right now."

That prompted this missive this morning from McCain spokesman Tucker Bounds:

"Barack Obama's assertion that the only problem with higher gas prices is that they've gone up too fast -- saying he'd prefer a 'gradual' increase instead -- shows how clearly out of touch he is with Americans struggling with record gas prices. At a time when Americans need relief at the pump, Barack Obama's support for higher gas prices and higher energy taxes is just another example of his weak economic judgment."