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Angie Drobnic Holan
By Angie Drobnic Holan September 18, 2008

A credit for workers cuts taxes for middle class

With a plummeting stock market grabbing headlines, Barack Obama tackled the economy in a speech in Elko, Nev.

"Change means a tax code that doesn’t reward the lobbyists who wrote it, but the American workers and small businesses who deserve it," Obama said. He then went through a litany of his tax proposals, including, "I will cut taxes — cut taxes — for 95 percent of all working families."

We've checked out many claims on taxes . It's a subject area that's ripe for distortion and attack.

But with this affirmative claim, Obama appears to be on solid ground.

The linchpin here is Obama's tax credit for workers, which is intended to offset payroll taxes. Single people can qualify for a $500 credit; married people filing together could get $1,000.

Obama wants to roll back the Bush tax cuts for people who make $200,000 or more if single and $250,000 or more as a married couple. His tax credits would phase out as they approach these incomes.

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Most people, though, don't make more than $200,000. In fact, according to Internal Revenue Service statistics, about 97 percent of all filers made less than that.

Now it's into the nitty-gritty. Obama said his tax plan would reduce taxes for 95 percent of working families. We consulted the nonpartisan Tax Policy Center, which has created detailed models for how each candidate's tax proposal would affect American taxpayers. The center's complex model includes the indirect effects of certain tax policies, such as Obama's proposed rate increase for corporations.

The Tax Policy Center's analysis does not specifically look at the subset of tax filers who are "working families." But the center can make the following statements about Obama's tax proposal, said principal research associate Bob Williams:

• 95 percent of all tax filers (working and nonworking) will get a cut in their individual income taxes.

• 95 percent of all families with children (working and nonworking) will get a cut in their total federal taxes.

Every taxpayer has different individual circumstances, but if you make less than $200,000 a year and you work, we can't see how your taxes would go up under Obama's proposals. IRS data show that 97 percent of tax filers make less than $200,000, so there are even two percentage points worth of leeway there. We rate Obama's statement True.

UPDATE: Since we published this item, the Tax Policy Center researched how Obama's tax proposals would affect workers. They concluded 94.3 percent of workers would receive a tax cut under Obama's plan; read their research here . This item was also updated to include information on Obama's tax credit phase out.

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