The Washington Post has this great comparison of the tax plans of McCain and Obama. Basically, both offer tax cuts for most people (sorry, Republicans call them "folks"). But Obama cuts taxes more for people in the middle and bottom of the income distribution. Obama will raise taxes IF and ONLY IF you make more than $600,000/year. And if you do make that much the difference in your tax bill will be around $115,000. So I can certainly see what the super rich would want to stop Obama. But why anyone who can even remotely call themselves "middle class" would be upset about Obama's tax plan is beyond me.
Check it out and think about your own income. Personally, I'm "poor" enough that I will get a bigger tax cut from Obama than from McCain.
10 comments:
"But why anyone who can even remotely call themselves "middle class" would be upset about Obama's tax plan is beyond me."
The informal line, apparently aimed at the middle and lower classes, I'm seeing spread by the republicans is that taxing the wealthy amounts to socialism and you don't want to be a commie socialist, do you?!
The other line being pushed is "Why tax those that helm our economy? That will filter down and won't help anyone."
I am with you, RBR, I'm just passing along what "they" are saying. I wonder when the massive pile of crap they are stacking up will finally tip over? Hopefully sooner rather than later.
Bert, you are absolutely right about the propoganda tactic of the Republicans. It's been very successful in the past.
The only way to fight it is to, somehow, convince the 60% of the Americans who would be far better off under an Obama administration to actually vote that way.
For your edification, here is the executive summary and full text of the Tax Policy Center report.
Some details: they compared the plans given in detail by campaign advisors vs. the candidates' stump speeches. Obama usually says he will extending payroll taxes to all income levels, which his advisors say is not part of the tax plan, but which would--if implemented--make his tax cuts smaller. On the other hand, McCain consistently overestimates the total tax cut he promises by 30-40%, because he says he would do away with the AMT entirely, whereas his advisors say he would merely continue current patches.
Good point about the payroll tax increase. But of course that increase would only hit people making more than $250,000 as lower incomes are already paying payroll taxes.
The bottom line is that if you make less than $250,000 (as individual, not a household) you will have more money back at tax time than you would under McCain.
The payroll income tax is a dusey. SSN is only paid on the first $102,000 per year today. To extend that is the equivalent of adding a 6% income tax to the late-year paychecks of those making between $100K-$200K. Since many people fall into that category who think of themselves as middle class, who have trouble paying mortgages and such, this could be a hotbutton issue. The $250K is not the limit of payroll taxes, it's $102K.
There's a reason why Obama says that the payroll tax increase is just one of the solutions on the table for fixing social security, and this is why. A solution might be to raise the cap but lower the actual rate. That would lower the effectiveness, but would raise the income level of the hit.
Of course, the 'other solutions' are things like cutting benefits and raising the retirement age, which is the GOP's favorite solution. That just allows Social Security to slowly wither.
The calculation for Obama is obviously balancing something with the payroll tax increase.
Oh, now I see what it is. Very clever! The Obama plan is to leave the $102K payroll tax limit in place, BUT start taxation again when you hit $250K.
There is also some commitment to stop the AMT expansion.
Frankly, until you can clean up and simplify the tax code, knowing what you will pay is a little difficult. There are deductions and loopholes and the AMT has to be adjusted. But really, no one is willing to do that because it brings in big, much needed revenue. The the little trick that LTG pointed out that Obama is using just pisses me off. It is another crafty complication in what is already a very complex code.
Those who argue that the tax code as it currently is written is inherently abusive, I think, are correct. When you have to hire professionals to help you get through your annual obligation, and when the code is so complex that you are very likely to be in violation, then transparency is gone and you set up a system where collecting taxes becomes a cat and mouse game. The tax code is the product not of economic policy but of pure politics.
I'm tired of tinkering and of seeign the code being used as some quiet form of social welfare policy (using tax credits and rebates, etc). I want a transparent code that is more fair all around. This trickle down method where you allow the rich with their investment income to trump wage income of the middle and lower class is crap.
USWest, I understand the philosophical objection to using the tax code for social policy, but we're so far down that road I don't know how to fix it. Take away the mortgage interest deduction, upon which tens of millions of American families have relied in making purchases for decades, and you hurt people unfairly. Take away the charitable deduction and watch how charitable rich folks really are. Watch every college scream. Take away the EITC and hurt poor working people straight up. Established expectations are already so great that it would be unfair to suddenly change things.
Personally, I favor raising the "cap" on Social Security rather than denying or reducing benefits and raising the retirement age- all of which undercut promises made. But I think Obama's plan is brilliant to make sure the "hit" doesn't start until much higher income brackets. Of course, it might be simpler to lower the rate from 6% to, say, 4.5%, then raise the cap.
Obama's plan, of course, is just a proposal. The legislature will do its own thing. These plans aren't really about what the law will be, but about the character of the person who proposes them.
"Obama's plan, of course, is just a proposal. The legislature will do its own thing. These plans aren't really about what the law will be, but about the character of the person who proposes them."
That's very true. What these competing tax plans tell us is the constituencies these two candidates will serve.
RBR, I agree. I also think debating the fine details of the plans is a bit silly for that reason. The bottom line is that Obama proposes tax cuts for middle and lower income taxpayers, and restoring tax levels to the same as they were under the Clinton Prosperity Years (late 1990s) for upper income people. Obviously, we know that those tax rates do not inhibit economic growth, as they are at least correlated with economic expansion (silly argument, but so is the reverse).
McCain really does promise more of the same. In fact, that's his basic plan: make the Bush tax policy permanent.
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