Comparing the Tax Plans of Barack Obama and John McCain
Posted by Brett Bittner on October 23, 2008
The Tax Policy Center, a joint project of the Urban Institute and the Brookings Institution, released this analysis (see graph below) of the tax plans proposed by both Barack Obama and John McCain. The first thing that jumps out at me is the stark difference for the top .1% of income earners. John McCain’s tax plan will decrease their tax liability by nearly $270,000, while for the same 147,000 families, Barack Obama plans to swing their tax liability in the other direction nearly $1 million annually by increasing their tax liability by just over $700,000. A married couple at the bottom of that .1% paid $976,706 in 2007, and under the Obama tax plan, that would change to $1.679 million. To give you an idea of what the tax brackets for 2007 were paying, take a look here.
McCain’s plan calls for a larger average tax cut across the board, focusing on those that are already shouldering a very significant burden of the taxation under the graduated tax brackets, being forced to hand over more than thirty cents of every dollar of earned income. Obama focuses his plan on the bottom of the income scale, giving the largest decrease in tax liability to the bottom 60% of taxpayers.
Obviously, they are appealing to opposite ends of the taxpayer spectrum. The only positive I see in McCain’s campaign is his understanding that the individuals who pay the most taxes will be unable or unwilling to support more of their income being taken by force every April. These people are the small businessmen and women who are continuing to achieve today, despite the overwhelming burden of taxes. They are also the small businessmen and women that provide 56% of all jobs, and 90% of America’s new jobs are created by them via the 27 million firms they own.
Sounds like someone is creating a tax plan for the greater good of the economy while someone else uses their tax plan to buy votes. I know what I think, but I will let you decide who “someone” and “someone else” are.
Graph from The Washington Post
Cross Post: United Liberty
Marty Fried said
I get the idea you are more in favor of McCain’s plan, in spite of the fact that most economists seem to support Obama’s. Of course, I don’t know this, but you bring up the point that “individuals who pay the most taxes will be unable or unwilling to support more of their income being taken by force every April.”
I don’t know how big an issue this is for rich people, but it seems like they have been getting tax cuts for a while, and it isn’t helping the workers at all – the rich seem to be getting richer, and the rest of us are getting poorer and working more and more. So, I think of this not as an isolated tax increase, but more like a payback. Also, the wealthier people have always been able to get away with paying less simply because they can afford better tax lawyers, and it’s more worthwile for them. I’ll bet I pay a higher percentage of tax than over 90% of the wealthier citizens, because I have either used a standard deduction, or the basic homeowner deduction with no other deductions.
I admire Warren Buffet, who complains that his taxes are too low, and he pays less than his secretary. He realizes that being rich is no good if everyone else is poor. After all, we lowly peons are the customers for the small business owners.
Personally, I don’t mind paying more taxes if it isn’t wasted. What good is a tax cut when the fed simply prints more money, and makes my savings worth less? They don’t need taxes when they can print money.
I would imagine you agree with a lot of what I say, and I agree with a lot of what you believe. As usual, I am voting against a candidate more than for the other. But I’m more optimistic about our chances for a positive change this time than I have been for a while. I certainly don’t worry about McCain/Palin’s warnings of socialism, terrorism, etc from Obama. I worry more that the sheeple might believe them, and they might win. That worries me a lot.
Brett Bittner said
Actually, I prefer neither.
IF there were only these two options, I would say that I support John McCain’s over Barack Obama’s. Jobs and the overall economy health are dictated by the upper income earners, who are showing their small business profits and losses on their personal income tax returns. When you take away more of their income through taxation, they will need to recoup those lost dollars by cutting expenses. The most expensive costs to a small business are also the easiest to control, payroll. They will cut staff to make up the difference. That means a loss of jobs, a loss of hours for those that remain employed, and those employees and ex-employees will be cutting back their expenses, which means that their non-essential spending will be lessened, making revenue for those companies decrease and the cycle continues. Interestingly, this is an example of the “trickle down economics” that liberals despise. A tax cut for those same small business owners, who provide 56% of jobs in this country, and 80-90% of newly created jobs, will work in the opposite way.