go deeper than the blurbs...
tax plans:
Tax plan face off: Obama vs. McCain
WHITE HOUSE RACE | Whoever wins, you'll probably pay less
June 30, 2008
BY ABDON M. PALLASCH
Political Reporter/
[email protected]
The rich would pay more under Barack Obama's tax plan, and the poor and middle-class would pay less, a nonpartisan analysis finds. Under John McCain's plan, the rich would pay much less than they do now, the poor and middle-class would pay a bit less, and the federal deficit would grow, the study found.
Each individual's tax situation is different, so it's hard to say for sure how much more or less you would pay under the presidential candidates' ever-evolving tax proposals.
And at this point that's all they are -- proposals that may or may not get through Congress. They don't take into account wars, whether the president will sign an expensive social program into law, or the world economy.
With those caveats, here are highlights of how the candidates' proposals to change the tax code would impact you:
Obama says he would hike several taxes on people making more than $250,000, including the amount they pay on capital gains. Currently, the top income tax rate is 35 percent. Under Obama, that would go back up to 39 percent. Obama's staff told the Urban-Brookings Tax Policy Center he would raise the rates for people in the top two brackets -- about 2.5 million filers out of 100 million-plus. People in those high tax brackets would see the tax rate on their capital gains hiked from the current 15 percent to 20-28 percent.
Obama started his campaign saying his plans would not increase taxes for people earning less than $250,000. But he found himself in an apparent contradiction by saying he would tax all income to fund Social Security, not just income up to $102,000, as is now the case. So now, Obama's plan calls for no Social Security tax on income between $102,000 and $250,000, but all income above $250,000 would be taxed for Social Security.
The 95 percent-plus of the American population that earns less than $250,000 would see the following tax breaks: A $500-per-worker tax credit for people who earn less than $150,000 and do not itemize, and a $4,000 credit per child in college. Seniors who earn less than $50,000 would pay no income tax.
The Tax Policy Center notes seniors could end up paying more if corporations respond to Obama's proposed increase in the corporate tax rate by passing those costs along to consumers.
McCain would make permanent most of the tax cuts President Bush has already enacted, including those that benefit the middle class, such as elimination of the marriage penalty and the increase in child credits. He would also keep cuts that benefit the wealthy, such as the elimination of the highest tax brackets. Obama would keep the breaks for the middle class but not the ones for the wealthy.
McCain would also double the dependent exemption from $3,500 to $7,000, benefitting big families of all incomes.
Obama would leave the top corporate tax rate at 35 percent. McCain would cut it to 25 percent.
The two candidates differ widely in their approach to the estate tax, which the Republicans call the "death tax." McCain would set it at 15 percent for estates above $5 million. Obama would set it at 45 percent for estates above $3.5 million.
Both candidates favor extending a "patch" that would keep the Alternative Minimum Tax from encroaching on middle-income families.
Largely because his tax proposals would leave tax breaks for the wealthy in place, McCain's plan would cost the U.S. Treasury more than Obama's, the Tax Policy Center found.
The precise cost depends on whether you assume the current tax breaks would be renewed or would expire.
Assuming they would have been renewed anyway, Obama's plan would bring in an additional $700 billion in taxes over the next 10 years, while McCain's would cost the Treasury $600 billion. Assuming legislators would have let the tax breaks expire, Obama's plan would cost the U.S. Treasury $2.7 trillion and McCain's $3.7 trillion.
The center uses various assumptions both campaigns quarrel with. Each campaign also accuses the other of not being honest with the numbers.
"Obama raises taxes in a way that's detrimental to the economy," said McCain adviser Douglas Holtz-Eakin. "The John McCain plan is a jobs-first plan that keeps small businesses in the game."
Obama's Brian Deese said the $600 million deficit the study pro- jects McCain's plan would create "doesn't count impact of current Iraq war spending. If McCain's plan drives the deficit up and puts upward pressure on interest rates, that increases costs for families and could force really Draconian, across-the-board spending cuts."
http://www.suntimes.com/news/politics/obama/1031268,CST-NWS-tax30.article