I love breaking down political personality and pageantry as much as the next person, but I still have hope that some voters care about the issues. Since we considered the possibility of a candidate's death [1] recently, let's take a look at another inevitable — taxes.
Here are some crucial distinctions between McCain and Obama that might help you figure out which tax plan you like better. Keep in mind: neither of these plans (dreams?) would avoid a deficit.
- Bush Tax Cuts: McCain wants to make the 2001 and 2003 cuts [2] permanent (they are set to expire in 2010). Obama would allow cuts for income over $250,000 to expire, but would readopt other Bush cuts.
- Capital Gains: Obama would most likely raise the capital gains tax [3] from 15 percent to 20-25 percent, but also promises to offset any burden that would cause middle/lower income families with tax credits. Obama also notes that most families see capital gains through their 401 (k) plans, which are exempt from capital gain taxes. Despite evidence that when capital gains rates go down, revenue goes up, Obama says he would consider raising it as a matter of fairness. [4] McCain would keep the capital gains at the revenue-making rate of 15 percent.
- Middle Class: Under Obama, high-income taxpayers would pay more, while everyone else's tax bill would be reduced. Under McCain, high-income taxpayers will see the greatest reduction in taxes.
To find out what the candidates have planned for small businesses, major corporations, Americans set to inherit some money, and why they might write some Americans a check .
- Small Business: McCain says he will make expensing rules more generous for small businesses. Barack Obama would eliminate the capital gains tax for start ups, and invest $250 million per year to increase small businesses in disadvantaged communities [5].
- Death Tax and Alternative Minimum Tax: Both would reduce it [6], but Obama would by a lesser degree.
- Corporate Taxes: McCain would lower the corporate tax rate [7] from 35 to 25 percent in exchange for a repeal of some corporate loopholes, such as preferential treatment for oil companies. Obama would eliminate special-interest loopholes and deductions.
- Refundable Tax Credit: McCain proposes cutting a check [8] for $2,500 to individuals and $5,000 for families if they purchase their own health plan. Obama would provide such a credit to low-income families (who may not qualify to pay income taxes), to help pay for child-care.
Overall, under McCain on average an American's tax bill would be cut by $1,200, while under Obama it will be cut by $160. But, Obama would give larger tax cuts to low and moderate-income households [9] and pay some of it by raising taxes on high-income taxpayers. Under McCain high-income taxpayers would benefit the most. And don't forget — the president doesn't actually have any power to tax. The next president will have to get Congress on board [10] if he wants to do anything at all!
Check out these sources if you want to know more about the candidate's positions:
- Barack Obama's fiscal plan [11]
- John McCain's fiscal plan [12]
- Libertarian candidate Bob Barr's tax plan [13]
- Green candidate Ralph Nader's tax plan [14]
- Tax Policy Center [15]
Source [16]