Coming on the heels of the GAO's astounding report that U.S. corporations made trillions of dollars in income yet 2/3's of them paid absolutely no, zero, zilch, nada, not one red-state dime in taxes, you would think that the middle and lower classes in this country (which comprise approximately 95 percent of the population) would be in the harbor dressed in Native American garb with torches and pitchforks in a modern-day version of the Boston Tea Party.
Well, let's step back for a minute, draw a deep cleansing breath and survey the tax landscape in a calm and rational manner.
Senator Obama's tax plan would restore fairness to the system and focus on the downtrodden middle class which has seen a decline of over $1,000.00 annually in real income over the Bush years. Remember the old American truism that the next generation will be better off than their parents'? Not anymore thanks to the massive shifting of wealth from the lower and middle classes to the ultra-weatlthy during the years of Republican control of Congress and the White House. Let's look at the candidates respective tax plans:
Senator Obama's Tax plan Calls For:
•A $1,000 Making Work Pay Tax Credit for 95% of Workers. Obama will provide a refundable tax cut of $500 for workers or $1,000 for working couples.
•Generous Additional Tax Cuts for Middle Class Families. Obama will provide a package of tax cuts to help families afford health care, college and save for retirement.
•Cutting Taxes To Below Where They Were Under President Reagan. Under Obama’s plan total federal taxes for typical families would be 19 percent lower than they were under President Reagan.
Senator McCain's Tax Plan Calls For:
•Only Middle Class Tax Cut Leaves Out 101 Million Households. McCain’s only direct tax cut for the middle class is an increase in the dependent exemption, which leaves out 101 million households with absolutely no benefit. Overall, the National Review concluded that the McCain plan offers “very little in the way of direct benefits” to the middle class.
•About $125 in Middle Class Tax Relief for Families Who Benefit. For a family with two children, McCain’s proposal to increase the dependent exemption would offer only about $125 in relief during the first year of his plan.
Tax Rates for Working Families:
•No Tax Increases for Families Making Under $250,000. Barack Obama has
made firm commitment not to raise any taxes for families making under $250,000
(and individuals making under $200,000).
•$3.6 Trillion in Tax Increases on Working Families. McCain’s health would require families to pay income taxes on their health benefits. According to McCain top advisors, his health care plan will accordingly be financed by a $3.6 trillion tax increase on working families. Even after taking into account McCain’s health tax credit, eventually tens of millions of middle class families would
pay more taxes.
Obama's Tax Plan for Corporation, Small Business and Innovation:
Corporate Tax Policies:
•End Tax Breaks for Companies That Ship Jobs Overseas. Would reverse the backwards incentive that allows companies to defer or avoid taxes entirely if they invest overseas while
requiring them to pay full and immediate taxes if they invest in America.
•New Tax Breaks for Companies That Create Jobs in America. For companies that expand or create jobs in America, Barack Obama would lower corporate tax rates with the savings attained from ending deferral.
•Voted to retain tax breaks for companies that ship jobs overseas.
•Nearly $200 billion in tax cuts to corporations, even if they do not invest in the US or create a single US job.
Includes:
$4bn for large oil companies
$2bn for health insurance companies
Small Business Tax Policies:
•Eliminate Capital Gains for Small Businesses. Obama would cut capital gains taxes to 0% for investments in small businesses and start ups.
•A New Small Business Healthcare Tax Credit. Obama would provide a 50% health care tax credit to small businesses and lower health insurance costs by $2,500 per family for all firms.
•Would continue to tax capital gains for small businesses at 15%.
•Added Costs for Firms That Provide Health Insurance. McCain would tax
employer contributions to employee health insurance plans for the first time in history.
Innovation Tax Policies:
· Make Permanent the R&D Tax Credit. Will give firms a strong, consistent incentive to invest in new R&D jobs here in the United States.
•Expand the Renewable Production Tax Credit. Would extend the federal Production Tax Credit (PTC) for 5 years to encourage investment in renewable energy.
•Reduces the Effectiveness of the R&D Credit. Would reform the R&D credit into a flat 10% credit that would weaken the incentive for firms to invest in new research jobs, and could reward companies that are cutting research and moving jobs overseas.
•Opposes Energy Research Incentives. Has repeatedly opposed legislation that ould have extended the renewable production tax credit.
McCain's Tax Plan for Corporation, Small
Business and Innovation:
Corporate Tax Policies:
•End Tax Breaks for Companies That Ship Jobs Overseas. Would reverse the backwards incentive that allows companies to defer or avoid taxes entirely if they invest overseas while
requiring them to pay full and immediate taxes if they invest in America.
•New Tax Breaks for Companies That Create Jobs in America. For companies that expand or create jobs in America, Barack Obama would lower corporate tax rates with the savings attained from ending deferral.
•Voted to retain tax breaks for companies that ship jobs overseas.
•Nearly $200 billion in tax cuts to corporations, even if they do not invest in the US or create a single US job.
Includes:
o $4bn for large oil companies
o $2bn for health insurance
companies
Small Business Tax Policies:
•Eliminate Capital Gains for Small Businesses. Obama would cut capital gains taxes to 0% for investments in small businesses and start ups.
•A New Small Business Healthcare Tax Credit. Obama would provide a 50% health care tax credit to small businesses and lower health insurance costs by $2,500 per family for all firms.
•Would continue to tax capital gains for small businesses at 15%.
•Added Costs for Firms That Provide
Health Insurance. McCain would tax
employer contributions to employee health
insurance plans for the first time in history.
Innovation Tax Policies:
•Make Permanent the R&D Tax Credit. Will give firms a strong, consistent incentive to invest in new R&D jobs here in the United States.
•Expand the Renewable Production Tax Credit. Would extend the federal Production Tax Credit (PTC) for 5 years to encourage investment in renewable energy.
•Reduces the Effectiveness of the R&D Credit. Would reform the R&D credit into
flat 10% credit that would weaken the incentive for firms to invest in new research jobs, and could reward companies that are cutting research and moving jobs overseas.
•Opposes Energy Research Incentives. Has repeatedly opposed legislation that would have extended the renewable production tax credit.
Candidate Obama’s Idea of Fiscall Responsible Tax Policies
•A Net Tax Cut That Cuts Overall Taxes Below Reagan. Obama’s tax cuts for middle class families are larger than his tax changes for high-income families and closing of corporate loopholes, cutting taxes below 18.2 percent of the economy – the level that prevailed under
President Reagan.
•Tax Cuts Paid for by Spending Cuts – Reducing the Deficit. Obama would make tough choices like ending the war in Iraq responsibly, limiting payments to high-income farmers and Medicare
HMOs, and ending no-bid contracts.
•News Organizations Say Obama’s Plans Add Up – and Are More Fiscally Responsible than McCain’s. The Wall Street Journal said that Obama’s numbers added up. The New York Times
said Obama’s budget was at least $150 to $250 billion more responsible annually than McCain’s budget. The Boston Globe found that Obama has been clearer and politically braver in showing how he would pay for his proposals than Senator McCain.
Candidate McCain’s Idea of Fiscall Responsible Tax Policies:
•A Tax Plan That Cuts Taxes By $3.4 Trillion More than Bush Has Proposed. Nonpartisan Tax Policy Center has found that over ten years, McCain’s fiscally irresponsible tax cuts would reduce revenues by $3.4 trillion relative to the Bush tax cuts.
•Could Add $1 Trillion to Defense Spending. Would raise defense spending towards cold war levels, costing another $1 trillion over the next decade.
•New York Times Says McCain Plan Falls At Least $2 Trillion to $3 Trillion Short. The New York Times analyzed McCain’s budget numbers and found that they would add more than $200 billion to $300 billion annually to the deficit.
•Washington Post says that McCain plan to balance the budget by 2013 is not credible and won’t work. The Washington Post analyzed the McCain budget and found that the claimed savings
from his spending cuts were “illusory.”
Direct Impact of Obama and McCain Tax Plans:
Single Parent making $40,000 with two young children and childcare expenses:
OBAMA $2,100 [includes $500 making work pay; $500 universal mortgage credit, and $1,100 from Obama expansion of the child care tax credit]
MCCAIN $125
Married Couple Making $75,000 with two children, one of whom is in college:
OBAMA $3,700 [includes $1,000 Making Work Pay; $500 universal mortgage credit; and $4,000 college credit net of current college credits]
MCCAIN $125
Married Couple making $150,000:
OBAMA $1,000
MCCAIN $0
70-Year Old Widow Making $35,000:
OBAMA $1,900
MCCAIN $0
Exxon-Mobil:
OBAMA $0
MCCAIN $1.2 billion
Source: Calculations based on IRS Statistics of Income. Does not include impact of health plans. Obama tax savings is conservative; does not account for up to $500 in savings from expanded Savers Credit.
See http://www.blogger.com/www.barackobama.com/taxes
Quoting a Wall Street Journal opinion piece:
"Sen. Obama believes a focus on the middle class is appropriate in the wake of the first economic expansion on record where the typical family's income fell by almost $1,000. The Obama plan would cut taxes for 95% of workers and their families with a tax cut of $500 for workers or $1,000 for working couples. In addition, Sen. Obama is proposing tax cuts for low- and middle-income seniors, homeowners, the uninsured, and families sending a child to college or looking to save and accumulate wealth..."
"In contrast, Sen. McCain's tax plan largely leaves the middle class behind. His one and only middle-class tax cut -- a slow phase-in of a bigger dependent exemption -- would provide no benefit whatsoever to 101 million families who do not have children or other dependents, or who have a low income.
But Sen. McCain's plan does include one new proposal that would result in higher taxes on the middle class. As even Sen. McCain's advisers have acknowledged, his health-care plan would impose a $3.6 trillion tax increase over 10 years on workers. Sen. McCain's plan will count the health care you get from your employer as if it were taxable cash income. Even after accounting for Sen. McCain's proposed health-care tax credits, this plan would eventually leave tens of millions of middle-class families paying higher taxes. In addition, as the Congressional Budget Office has shown, this kind of plan would push people into higher tax brackets and increase the taxes people pay as their compensation rises, raising marginal tax rates by even more than if we let the entire Bush tax-cut plan expire tomorrow.
The McCain plan represents Bush economics on steroids. It has $3.4 trillion more in tax cuts than President Bush is proposing, largely directed at corporations and the most affluent. Sen. McCain would implement these cuts without proposing any meaningful steps to simplify taxes or eliminate distortions and loopholes. In addition, Sen. McCain has floated over $1 trillion in new spending increases but barely any specific spending cuts."
See http://online.wsj.com/public/article_print/SB121867201724238901.html
Clearly, when it comes to the candidates' tax plans and the working and middle classes, there is just no comparison.
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