Obama promises shift in tax code

WASHINGTON – Democratic presidential candidate Barack Obama proposed Tuesday that the tax code be overhauled to give poor and middle-class taxpayers up to $85 billion in relief each year by shifting that burden to corporations and wealthy investors.

The Illinois senator described his plan as a step to curb Washington’s preferential treatment of the rich and powerful and reward the hard work of average Americans.

“Instead of having all of us pay our fair share, we’ve got over $1 trillion worth of loopholes in the corporate tax code,” Obama said. “This isn’t the invisible hand of the market at work. It’s the successful work of special interests.”

Obama pledged tax relief to 150 million workers in the form of a credit of up to $500 per person. It would offset payroll taxes on the first $8,100 of a worker’s earnings. An Obama adviser said the tax break would phase out at incomes between $150,000 and $200,000 a year.

The senator also vowed to eliminate income taxes for seniors making less than $50,000 a year. For homeowners who do not file itemized tax returns, he proposed a tax credit averaging about $500 per year.

Obama urged that the tax code be simplified so that millions of Americans could prepare their returns in less than five minutes. He also pledged to abolish capital-gains taxes for start-up businesses, a step designed to encourage innovation and spur new jobs.

His advisers were vague in identifying the sources of money to cover the tax cuts.

The senator called for increasing taxes on capital gains and dividends for those in the highest tax brackets, but aides declined to say by how much. Advisers said his plan also would close corporate tax loopholes, crack down on offshore tax havens and block hedge funds from avoiding taxes.