Skip to comments.The Obama and McCain Tax Plans: How Do They Compare?
Posted on 10/31/2008 10:10:00 AM PDT by justlittleoleme
The economy improves under each plan as compared to the baseline. The baseline forecast assumes that all of the Bush tax cuts disappear, which raises the cost of capital and marginal tax rates. Both candidates plan to reduce taxes compared to this scenario.
Senator McCain's plan is substantially better at spurring economic growth than Senator Obama's. This is not surprising, since Senator McCain focuses on economic growth and job creation while Senator Obama focuses on the redistribution of income. As Tax Policy Center Director Len Burman states, "the major themes of the two plans are, in the case of Senator McCain's plan, that the major emphasis is on economic efficiencycuts marginal tax rates, improves economic incentives
. In the case of Obama's plan, the goal is primarily to improve progressivity
to lower tax burdens on low-income people and raise them on higher-income people." Each presidential candidate achieves his stated goal,with Senator McCain generating the most new jobs, growth, and additional income for individuals. Senator Obama's plan drives up the tax rate for individuals with annual incomes above $250,000 and redistributes money to workers with lower incomes.
(Excerpt) Read more at heritage.org ...
Well if Babmi gets elected, I’m sure I won’t be getting a raise in 4 years.
Awesome. I hope they send out vaseline to make it easier.
Very well done report.....I just linked it to all my email friends....
This corrected a miconception my me (and probably others) who thought that Obama’s plan would let ALL the Bush tax cuts expire, effectively increasing taxes across the board.
Even so, this analysis clearly shows how McCain’s plan is better for everyone as well as the economy.
It’s just too bad that facts and data like this can form the basis of the election instead of media hype and sound-bite rhetoric.
Obama can say all these wonderful things about his tax plan and publish them on his web site, but we all know that what comes out of Congress will be nothing but a massive tax increase on the working class.
As I understand it, Obama wants to cure economic ills by restructuring the contributions collected from various economic classes. He wants to take more from the top level, less from the middle level and actually give some to the lower economic level - which is really hurting. His philosophy is that this distribution is more fair, but the question is will it lift the economy? Will it result in more buying of goods and services which will stimulate the economy? Obama’s view is that the consumer is the economic engine.
Is there currently inflation? If so, then the money will most likely go to purchase the same amount of goods and services, not more. Are inflated goods foreign like gasoline? Then the money will flow outside the USA. Have people borrowed to stay up with past inflation and will the redistributed money go toward repaying prior debt? All these factors need to be considered when examining whether this will help the economy.
Will the money retained go to expanded or new federal social welfare programs? That may employ more people, but at typically low paying social service or non-profit jobs. It will also increase dependence of people on programs to compensate for their poverty. They will be provided with more services and not necessarily gain the means of lifting themselves out of poverty. Will it go toward federal construction projects? Will government become the consumer that drives the economy?
As I understand McCain’s strategy, he wants to retain the Bush tax cuts. This would not increase the taxes on the lower economic class that pays no taxes. However he wishes to give additional tax breaks to the upper economic class and middle class in the form of elimination of capital gains tax, death tax and corporate taxes. This apparent deficit will be compensated by tax revenue form increased attraction of corporations to the USA, increased capital for investment and business expansion, increased savings. His philosophy is that a rising tide lifts all ships. The increase in business will employ additional people at higher wages.
This tax structure would stimulate economic growth. Coupled with a strategy that streamlines regulations through smaller government and invests in R&D, technical and financial support through economic development grants and a more business friendly attitude.
There would also be a component that looked at the past Democrat social tinkering with the integrity of sound lending practices and regulate upper level banking practices regarding credit.
Although McCain’s approach is less direct, it accomplishes the economic stimulus we need, while Obama’s plan sounds to people like more money in their pocket -it is not much and it will go out the door in a flash.
Am I correct?
|Income||Avg. tax bill||Avg. tax bill|
|$603K and up||-$45,361||+$115,974|
Income Tax Liability
Total Tax Savings
(Up to $15,000)
|$1,200 ($12,000 x 10%)||$5,000||+$3,800|
|15% Bracket ($15,650 - $63,700)
||$1,800 ($12,000 x 15%)||$5,000||+$3,200|
|25% Bracket ($63,700 - $128,500)
||$3,000 ($12,000 x 25%)||$5,000||+$2,000|
|28% Bracket ($128,500 - $195,850)
||$3,360 ($12,000 x 28%)||$5,000||+$1,640|
|33% Bracket ($195,850 - $349,700)
||$3,960 ($12,000 x 33%)||$5,000||+$1,040|
|35% Bracket ($349,700 and Over)
||$4,200 ($12,000 x 35%)||$5,000||+$800|
A few more links and impactful graphics on post #8. It helped raise some more doubts in a few co-workers.
Thx very much...they are on the way to my mailing list...
And now Bill Richardson said $120,000
Your last chart is deceptive. Although McCain allows for a $5000 deduction, he also increases earned income by including the employer amount paid for your health insurance as income.
I think one of the key points is that Obama says he will reduce taxes on everyone making below $250,000 or whatever, he also states that he will not renew the Bush tax cuts in 2011 - effectively raising the taxes on the middle class by default.
Uh, no. That is the myth the chart exactly debunks.
McCain does not offer a $5000 deduction (which would reduce taxes by $5000 times your marginal tax rate). Instead, he offer a $5000 credit.... that is a direct $5000 reduction in the taxes you owe.
What the chart correctly shows is that if you work for a generous big corporation and get $12,000 in employer-paid insurance, your income tax bill increases by $3,000 (assuming the 25% marginal tax rate), offset by the $5000 tax credit, for a net additional $2000 after-tax income.
If you work for a small business that pays a small fraction of your health coverage (say $250/month), you income tax increases by $750 ($250/mt x 12mts x 25%) offset by the $5000 credit, which is an additional $4250 after-tax income.
If you are self-employed or your employer doesn't pay for health insurance, it's an additional $5000 directly in your pocket
McCain replaces a small, discriminatory deduction with a much larger credit, and gives you more choice and control. Obama throws crumbs at you while keeping you more dependent on your employer's "company store" and on the government. It's really a no-brainer.
This is a really excellent thread. It clarifies a lot for me.