Business and Economy: Comparing the Obama and McCain tax plans
Story by Chris Graham
(First in a series.)
John McCain and his surrogates are right. Barack Obama is going to raise your taxes – if you’re among the top 1 percent of wage earners.
An analysis of the McCain and Obama tax plans done by the nonpartisan Tax Policy Center shows that both of the presidential candidates would slash taxes on average, McCain by 2 percent for the average taxpayer and Obama by 0.3 percent. Those numbers are a bit deceiving, though, considering that the bulk of the McCain tax cuts go to individuals and families making $2.87 million a year or more, while the Obama tax cuts are focused on lower- and middle-class wage earners.
People making between $18,982 and $37,595 a year will get a $113 tax cut under the McCain plan and an $892 tax cut under the Obama plan. Those making between $37,596 and $66,354 will get a $319 tax cut under McCain and a $1,042 tax cut under Obama. For those making between $66,355 and $111,645, the tax cut is $1,009 with McCain and $1,290 with Obama.
The cuts for those making between $111,646 and $160,972 are $2,614 with McCain and $2,204 with Obama. At the $160,973 to $226,981 level, the cuts are $4,380 under McCain and $2,789 with Obama.
The focus shifts from there under McCain to big decreases for those making $226,982 to $603,402 ($7,871 tax cut compared to a $12 tax cut under Obama), those making between $603,403 and $2.87 million (a $45,361 tax cut under McCain compared to a $115,974 tax increase under Obama) and those making more than $2.87 million (a $269,364 tax decrease under McCain and a $701,885 tax increase under Obama).
Highlights of the Two Plans
– Provide a Tax Cut for Working Families: Obama will restore fairness to the tax code and provide 150 million workers the tax relief they need. Obama will create a new “Making Work Pay” tax credit of up to $500 per person, or $1,000 per working family. The “Making Work Pay” tax credit will completely eliminate income taxes for 10 million Americans.
– Eliminate Income Taxes for Seniors Making Less than $50,000: Barack Obama will eliminate all income taxation of seniors making less than $50,000 per year. This proposal will eliminate income taxes for 7 million seniors and provide these seniors with an average savings of $1,400 each year. Under the Obama plan, 27 million American seniors will also not need to file an income tax return.
– Simplify Tax Filings for Middle Class Americans: Obama will dramatically simplify tax filings so that millions of Americans will be able to do their taxes in less than five minutes. Obama will ensure that the IRS uses the information it already gets from banks and employers to give taxpayers the option of pre-filled tax forms to verify, sign and return. Experts estimate that the Obama proposal will save Americans up to 200 million total hours of work and aggravation and up to $2 billion in tax preparer fees.
– Provide Tax Relief for Small Businesses and Start Up Companies: Barack Obama will eliminate all capital gains taxes on start-up and small businesses to encourage innovation and job creation. Obama will also support small business owners by providing a $500 “Making Work Pay” tax credit to almost every worker in America. Self-employed small business owners pay both the employee and the employer side of the payroll tax, and this measure will reduce the burdens of this double taxation.
– Keep Tax Rates Low: Entrepreneurs are at the heart of American innovation, growth and prosperity. Entrepreneurs create the ultimate job security – a new, better opportunity if your current job goes away. Entrepreneurs should not be taxed into submission. John McCain will keep the top tax rate at 35 percent, maintain the 15 percent rates on dividends and capital gains, and phase-out the Alternative Minimum Tax. Small businesses are the heart of job growth; raising taxes on them hurts every worker.
– Cut The Corporate Tax Rate From 35 To 25 Percent: A lower corporate tax rate is essential to keeping good jobs in the United States. America was once a low-tax business environment, but as our trade partners lowered their rates, America failed to keep pace. We now have the second highest corporate tax rate in the world, making America a less attractive place for companies to do business. American workers deserve the chance to make fine products here and sell them around the globe.
– Allow First-Year Deduction, Or “Expensing”, Of Equipment And Technology Investments: American workers need the finest technologies to compete. Expensing of equipment and technology will provide an immediate boost to capital expenditures and reward investments in cutting-edge technologies.
– Establish Permanent Tax Credit Equal To 10 Percent Of Wages Spent On R&D: This reform will simplify the tax code, reward activity in the United States, and make us more competitive with other countries. A permanent credit will provide an incentive to innovate and remove uncertainty. At a time when our companies need to be more competitive, we need to provide a permanent incentive to innovate, and remove the uncertainty now hanging over businesses as they make R&D investment decisions.