A taxpayer's effective marginal tax rate (EMTR) is the percentage of an additional dollar of income that would be paid in federal income tax. An individual's EMTR could affect the decision to work or save more, or avoid income tax. We use the TPC's microsimulation model of the federal tax system to calculate EMTRs under current law and under the presidential candidates' proposals. The Obama plan would lower EMTRs for the majority of households in 2009. Close to 80 percent of the population would see no change in their EMTR under Senator McCain's plan; most others would face lower rates.
Amid continued tumult in financial markets, the Treasury Department has developed a systematic plan to stabilize the financial system. Observers have been worried that the huge losses suffered by both long-term shareholders and recent investors in financial companies have made it impossible for these firms to raise enough new capital to work their way out of the current crisis. In response, the Treasury plan would inject significant amounts of government funds into these companies.
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