Posted on 02/05/2008 7:48:49 PM PST by SeekAndFind
Regardless of how much money you make, you have skin in this game. The four leading presidential candidates say they're concerned about the taxes that Americans pay out of their paychecks. And they all vow to do something about it if elected.
Now with the economy at the forefront of the presidential campaign, the leading candidates' tax proposals will come under increasing scrutiny in the coming weeks.
Here's a look at some of the ways that Hillary Clinton, Barack Obama, John McCain and Mitt Romney would realign tax policies and how those changes could affect your take-home pay.
Keeping the tax cuts in place
One of the central questions is what to do about a series of tax cuts passed in 2001 and 2003 set to expire in three years.
The four candidates seem to agree on one thing: They want to preserve the cuts for low- and middle-income earners. Those tax cuts include lower rates, reduced taxes paid by married couples and a higher standard deduction.
But the Democratic and Republican candidates part company when it comes to upper-income earners.
Both McCain and Romney have said they would preserve the tax cuts for high-income earners - typically defined as households that make $250,000 or more. Clinton and Obama want to repeal them for taxpayers in that group.
Clinton also would reduce the value of some personal exemptions and itemized deductions for big earners.
Part of the rationale given for restoring higher taxes on upper-income households is that they benefited the most from the 2001 and 2003 tax cuts, and that continuation of the tax cuts for those at the top of the heap may force the government to raise taxes on everyone else or cut spending.
Those who oppose taxing the rich more note that the top 1% - taxpayers making more than $250,000 - already account for 40% of all federal income tax revenue. Taxing them more, proponents of extending the tax cuts say, may lower tax receipts because high-income filers will seek more ways to shelter their money from taxes.
New tax breaks
The candidates also have somewhat different ideas about what kind of new income tax breaks to offer.
On the Republican side, Romney has said he wants to permanently lower the rate on the lowest tax bracket to 7.5% from 10%. Currently that tax bracket applies to roughly the first $8,000 for single filers and the first $16,000 for married couples filing jointly.
And he has proposed permanently exempting workers over 65 from having to pay payroll taxes, which are used to fund Social Security.
McCain hasn't yet offered up any individual income tax breaks beyond proposing to make the 2001 and 2003 breaks permanent.
On the Democratic side, Obama would offer a tax break to seniors by eliminating their income taxes if they make less than $50,000.
Obama also would create a credit worth up to $500 per working person ($1,000 per family) to offset Social Security tax on the first $8,100 of earnings. The credit would start to phase out for people with incomes between $150,000 and $200,000.
Both he and Clinton have said they want to expand the earned income tax credit for low-income workers. And they want to offer an expanded saver's tax credit although in somewhat different ways.
Clinton would offer a savers' credit equal to 100% on the first $1,000 saved by married couples making less than $60,000, and a 50% matching credit for couples making between $60,000 and $100,000.
Obama would match 50 percent of the first $1,000 of savings for families that earn under $75,000.
New retirement tax bites
The candidates' tax proposals aren't all sugar. There are notable differences, for instance, in how they might treat payroll taxes in a bid to shore up Social Security over the long haul.
Obama would consider increasing the amount of wages subject to the payroll tax. Currently, the first $102,000 of wage income is subject to the 12.4% tax, half of which is paid by workers and half by their employers.
Obama has indicated he might favor lifting that cap but only after imposing a "donut." A donut would protect from the payroll tax a certain portion of wages above the current cap - for instance, wages between $102,000 and $202,000. But any earnings above that ceiling would be taxed.
It's not clear yet whether a payroll tax increase would be in the offing under Clinton or McCain, because both candidates have been spare on details.
Clinton has said she doesn't want to eliminate the cap on the income subject to the Social Security tax. But that doesn't necessarily rule out an increase in that cap or a higher tax rate.
McCain, meanwhile, has said he would prefer Social Security funding to be shored up by reducing growth in benefits rather than by raising the payroll tax.
Romney doesn't want to raise payroll taxes, but instead favors the idea of letting workers have individual investment accounts and fund them with money from the surplus paid into the system.
Clinton and Obama oppose the notion of diverting payroll taxes - whether from the system's surplus or direct from your paycheck - to fund accounts.
Don't rearrange your budget yet
Of course, campaign promises are often easier to make than they are to keep. A lot can come between a newly elected president and his or her ideas about taxes.
Political reality, for one. Just look at President Bush and Congress. Their inability to come to agreement has stymied decisions.
Then there's deficit reality. The budget that Bush submitted Monday projects a deficit of more than $400 billion. That could tie the hands of the next president to make tax changes.
Or consider the Alternative Minimum Tax (AMT). Everyone in Washington says they want to do something about the outmoded tax scheme, which was originally aimed at the rich but is increasingly hitting the middle class. But no one has an appealing way to pay for fixing it. The price tag for reform or repeal ranges between $500 billion and $1 trillion over 10 years.
"No one has really staked out a credible claim at fiscal responsibility," said Len Burman, director of the Tax Policy Center. "They'd just devote deficits to different purposes."
LOL isn’t the Philippines taken over by Islamists?
What a stupid headline. Who wins? Who has always won, the Gestapo known as the IRS.
when they scream fairness we should run
Appealing to whom? I have an appealing way to fix it, abolish it.
Honestly folks,
Your one liners are funny and interesting...
But, I’d be curious to read your opinions/analysis as to who among the 4 is the least economically damaging or most tax payer friendly in terms of their tax policies.
Look for lower and middle income houses with Huckabee, McCain or Romney signs or stickers on the cars, just to drive home the lesson.
Of course we know who wins. It’s the one they don’t talk about. The most Un American agency in the US known as the IRS
Whoever wins, we lose.
Romney.
Next question.
Haha! After tonight I am thinking the same thing.
The most ironic thing is that if one of the ‘candidates’ ensures my healthcare availability via universal healthcare, this ‘top 1%’ wage earner will have absolutely no reason to keep working and paying taxes so that other’s don’t have too.
No, most of the Philippines is Roman Catholic, actually. Only a few Southern islands are Muslim.
That’s like asking: Do you want to be beheaded, hung by the neck, go before a firing squad or gassed? There are no good choices when it comes to Juan McAztlan/Gomer Pyle vs. Shrillary/Osama.
It's no contest. From their promises and position papers, you must give the title to the world champion panderers and promisers, the Democrats.
What, part of the competition is that you expect the candidate to actually deliver on their promises? Well, that's different. I'm still waiting for the Middle class tax cut Bill promised me in 1990. And this "donut" concept Obama is throwing out? I can imagine what the hole in the middle is for - you and me.
Not that the Republicans are much better. They promise much less, but then they deliver it.
In short, this thread is a fool's errand. There is no surplus for anyone to give back to the taxpayer any more - only debts and obligations. There are no quick fixes, no easy answers. None of the candidates even pays lip service to "limited government" any more. "None of the Above" has the best shot for my vote.
Regardless of their plans to change federal spending in some way, most of the candidates are unthinkingly carrying on the unconstitutional federal spending practices started by FDR. This post (<-click), in another tax related thread, attempts to explain how FDR's disdain for 10th A. protected state powers created an environment where most presidential candidates have irresponsibly ignored their oaths to defend the Constitution by proposing federal spending programs based on non-existent federal government powers.
In fact, Obama, followed by Clinton, have actually been ranked by some observers as the first and second of the big-time spenders respectively for '08 spending proposals.
Big-shot federal spendersRegardless that the above referenced page shows John McCain is a "small potatoes" spender when compared with Obama and Clinton, he is undoubtedly disregarding constitutional spending restraints like the others are.
Again, people need to wise up to the very serious problem of a federal government that is not operating within the restraints of the Constitution, particularly where high taxation as a consequence of unauthorized spending is concerned. The people need to get in the faces of spending-happy presidential candidates and make them commit to making the federal government once again operate within constitutional spending restraints. (The Democrats might as well go home.)
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