Tuesday, September 2, 2014 23:13

The facts about the McCain and Obama Tax Plans

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Posted by ep on Friday, September 5, 2008, 12:25
This news item was posted in Politics category and has 20 Comments so far.

I think there is more confusion around the candidate’s proposed tax plans than any other issue in the election. The confusion stems from the Republican brand of being the party of lower taxes, a poor job by Democrats and the media of presenting the facts and misrepresentations by Republicans.

Below is a graphic and details I have gathered along with their sources. Most of the information originates from an analysis by the bi-partisan Tax Policy Center and is referenced by various sources. I have included a link to the most recent analysis updated 8/28 totaling 58 pages.

If you find any omissions or corrections please include those in the comments with a source.
Thanks,
-ep

Obama vs. McCain Tax Graphic


Differences between the tax plans

  • Obama- Seniors making less than $50k would not pay any taxes. (6)
  • Obama- expanding the earned income tax credit (6)
  • Obama- Those making less than $150,000 a $500 tax credit per person on the first $8,100 in income (6)
  • Obama- Giving those making under $75,000 a 50% federal match on the first $1,000 of savings, and (6)
  • Obama- Triple Earned income credit for minimum wage workers
  • McCain- Plan would include health benefits provided by employer as taxable income which would be at least partially and potentially fully covered by a tax credit of $5k for families. Benefits could push people into higher tax brackets (2)
  • McCain- Increase deductions for dependents
  • Obama- Estate Tax at 45% for estates valued north of $7million. An increase on the current exception (2)
  • McCain- Berkeley economist Brad Delong has estimated, the McCain plan, as compared to the Obama plan, would lower annual incomes by $300 billion or more in real terms by 2017, costing the typical worker $1,800 or more due to the effect of large deficits on national savings and thus capital formation(2)
  • Obama- plan would not raise any taxes on couples making less than $250,000 a year, nor on any single person with income under $200,000 — not income taxes, capital gains taxes, dividend or payroll taxes.(2)
  • Obama- Top two tax brackets would return their 1990’s levels of 36% and 39.6% (2)
  • Obama - Top capital-gains rate for families making more than $250,000 would return to 20% (the lowest rate that existed in the 1990s and the rate President Bush proposed in his 2001 tax cut. A 20% rate is almost a third lower than the rate President Reagan set in 1986).(2)
  • Obama- Plan would reduce taxes for 81.3% of Americans (4)
  • McCain- Plan doesn’t provide a tax cut for 65.8 million (5)
  • Obama- Net tax cut bringing revenues to less than 18.2% of GDP, the same level of taxes that prevailed under Regan (2)

Differences in business taxes

  • Obama- Payroll taxes for employees making over $250k would increase as employers would have to pay Social Security taxes (1)
  • Obama- No tax increases for small businesses earning less than $250k (1)
  • Obama- Tax credit for employers who provide health care(1)
  • Obama- “The vast majority of small businesses would face lower taxes under the Obama plan than under the McCain plan.” (2)
  • McCain- Would lower corporate taxes to 25% from 35% (7)

Impact on the national debt

  • McCain’s tax plan would lead to a $4.2 Trillion larger deficit over the next 10 years. (1)
  • Obama’s tax plan would lead to a $2.9 Trillion larger deficit over the next 10 years. (1)

I stumbled on an interesting quote on progressive taxes from the father of capitalist theory I thought I would share:

“I’d also add that Smith embraced progressivity: “It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.” (7)

Sources:

  1. Tax Policy Center – Analysis of the two tax plans
    http://www.taxpolicycenter.org/publications/url.cfm?ID=411749
    Bi-Partisan nonprofit group formed by the Urban Institute and Brookings Institute
  2. Wall Street Journal – The Obama Tax Plan
    http://online.wsj.com/public/article_print/SB121867201724238901.html
  3. FactCheck.org – Fact Check Obama speech
    http://www.factcheck.org/elections-2008/factchecking_obama.html
  4. Tax Policy Center – Chart of Barak’s tax plan impacts http://www.taxpolicycenter.org/numbers/displayatab.cfm?Docid=1968&DocTypeID=2
  5. Tax Policy Center – Chart of McCain’s tax plan impacts http://www.taxpolicycenter.org/numbers/displayatab.cfm?Docid=1968&DocTypeID=2
  6. CNN – What they’ll do to your tax bill
    http://money.cnn.com/2008/06/11/news/economy/candidates_taxproposals_tpc/
  7. Business Week – McCain and Obama on Tax Reform
    http://www.businessweek.com/investor/content/jun2008/pi20080622_415010_page_2.htm
  8. Washington Post- Obama vs. McCain Tax Proposal
    http://www.washingtonpost.com/wp-dyn/content/story/2008/06/09/ST2008060900950.html

PDF- Tax Policy Center Analysis of Obama and McCain Tax proposals

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20 Responses to “The facts about the McCain and Obama Tax Plans”

  1. Madame
    5 September, 2008, 23:57

    I think the reason that dems haven’t really defended themselves on media skewing of their tax policy… is because nobody really wants to talk too much about Taxes at all. It’s best not to draw attention to the matter at all — in case either side has to then take back their words.

  2. [...] The facts about the McCain and Obama tax plans [...]

  3. Vlad
    13 September, 2008, 0:34

    hehe..Palin is smokin hot.

  4. zer0ne
    21 September, 2008, 8:44

    I hope more people see this chart. This alone could sway a lot of people.

  5. Beca
    22 September, 2008, 17:29

    This is extremely helpful because it not only has an easy to understand chart, but the summaries and breakdown of both plans is excellent. This absolutely needs to be in every newspaper in the country! It is very important that, especially the low information voters, get this information sine they usually rely on network news and TV campaign ads for their “information”.
    Can the author of this send it to every newspaper in the nation? Please?

  6. 6 October, 2008, 9:56

    I see that Obama wants to raise taxes on the highest paid people in the us, but decrease taxes on the lowest. The problem with that kind of thinking is that the highest paid people already pay the lions’ share of the taxes, while the lowest pay hardly any at all.

    Lowering taxes on the lowest earners might not work cause some of them aren’t paying taxes at all. Lowering their taxes gives them money. Raising taxes on the people who are already paying the highest rate of taxes won’t really work either cause it will not give them incentive to do better and work more. They will see that the less they make, the less taxes they will have to pay…and the incentive to do good will be taken away. That is why I do not like Obama’s plan. I say give the incentive to the middle class, and leave the higher class alone. They are already paying the most taxes out of everyone.

    -Robert-

  7. 6 October, 2008, 10:43

    Robert, thank you for the comment.

    I’m going to try to paraphrase Warren Buffet as I think he does a great job of communicating his position on this.

    He believes that the top 2% of American’s have prospered largely because of the opportunity that America has provided them. Therefore they have a greater responsibility to ensure that those opportunities continue to be available.

    In addition, Buffet pays a lower tax rate than his secretary. This is because a large portion of his income is derived from dividends and capital gains (which are currently taxed at 15%). Most high earners receive a lot of their income from similar sources and end up paying one of the lowest tax rates in the country. The swing in taxes under Obama’s is primarily due to moving the capital gains and dividends taxes back to 20% (less than under Regan).

    I know some people in THAT tax bracket. They are smart, if they earned it themselves they are very hardworking and driven. Paying some more in taxes isn’t going to make them any less driven or competitive because that is just built into who they are.

  8. EP2
    16 October, 2008, 11:42

    OMG Robert!! Heard anything about tax loopholes and overseas accounts that allow corporations and the very rich to hide income?

    I too know people that are in THAT tax bracket. Even though they have worked their rears off to get were they are they feel that they should contribute more than the less fortunate do. They do not take advantage of the loopholes and are willing to pay an increase in their taxes. I also know peolpe with Master’s degrees who work their rears off and make less than $40,000 annually.

    I do see your point about raising the taxes on the folks who make millions and then drive our economy into the toilet because of their greed!!! AND then expect the rest of us to pay taxes to bail their rears out. AND then send their executives to some posh resort in CA costing $440,000! How dare they ask for/expect a tax decrease!!!!!

  9. 22 October, 2008, 12:05

    Obama’s tax plan will destroy the Social Security system.

    Obama says his income tax plan will lower taxes for 95% of Americans. There is just one problem with this, 40% of Americans already pay no income tax. Obama’s response to this is that these people pay Social Security tax. Well, that’s not income tax, but a contribution to their retirement plan. So if he wins and implements his tax plan, for the first time in the history of Social Security, 40% of the people who will get retirement benefits will have paid nothing for them. Social Security will then loose all pretext of being a retirement plan, and will become a national welfare program.

    This will cause Social Security to lose public support in a massive way. Leave Social Security contributions out of income tax plans. If you take some peoples income taxes to pay others Social Security taxes, Social Security will be destroyed forever.

    http://strategicthought-charles77.blogspot.com/2008/10/obamas-tax-plan-will-destroy-social.html

  10. 23 October, 2008, 9:23

    Charles-
    Your post doesn’t make any sense. If you can elobarte further please and provide sources it would be appreciated.

  11. Anonymous
    31 October, 2008, 7:53

    my favorite color is green.

  12. Anonymous
    31 October, 2008, 7:57

    wow this is an important issue to our country why would we even care about your favorite color. very disappointing. :(

  13. Anonymous
    31 October, 2008, 8:00

    I said it because its funny how everyone gets so mad. This is America we’ll be fine no matter how we turn out. weather its obama or mccain.

  14. Anonymous
    31 October, 2008, 8:04

    Are you serious this is very important to our country. I strongly believe that Obama or Mccain will help our country very much. Are you some random kid sitten in a high school in a government class with nothing to do but get on blogs and screw around. That is very inappropriate of you. I would hope you would have more common sense than that. :x

  15. Anonymous
    3 November, 2008, 9:05

    Screw you my favorite color is red

  16. jimmy
    3 November, 2008, 9:31

    I don’t know, you have a lot of facts about what obama will do and what mccain won’t do. Although you suggest that they are facts, the way the facts are written gives me an instant obvious bias feeling. So to sort of level it out, this is a link to what John Mccain illustrates as his tax plan. http://www.johnmccain.com/TaxFacts/Family.htm

  17. jimmy
    3 November, 2008, 9:38

    By the way, Im still very undecided and I stumbled upon this blog looking for good canidate platform info. It is so hard to find unbiased info anywhere. Obviously the canidates websites are both veeeeeery biased and probably slanderous. So, i just want to let you know im not accusing you of lieing are anything. In a way, there is always bias no matter what.

  18. jimmy
    3 November, 2008, 9:41

    To be even more fair i found this pdf file about obamas tax plan by Obama.com http://www.barackobama.com/pdf/taxes/Tax_Plan_Facts_FINAL.pdf

  19. Anonymous
    3 November, 2008, 10:07

    Here are some ASTOUNDING HORRIBLE facts about Obama that are linked to the actual sources including news websites and legislation documents: http://boards.bengals.com/showthread.php?t=30856

  20. 3 November, 2008, 10:34

    Jimmy-
    The bullet points are summaries from the bi-partisan group and from various sources. I tried to take great care not sound our present them in a biased manor. Which means I either failed or one plan is superior to the other. The reason more bullets are there for Obama is his plan has a lot more subtlety to it, whereas McCain’s is pretty much cut taxes (with the exception what he wants to do with health care).

    Anonymous-
    I’m going to leave your post even though it is idiotic and annoys me. No one has made a big deal of some of McCain’s endorsements like that of the Klu Klux Klan or the preacher who endorsed who said, “Hitler was a gift from God”. The reason is because neither men looked for the endorsement of these outlandish groups. I would prefer this site to not descend into a mud slinging contest about who was worse Keating vs. Rezco/ Klan vs. Hamas/ Wright vs. Parsley which is where you want to take it.

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