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That bears repeating: Obama would cut taxes for ordinary people more than McCain would.
According to the Tax Policy Center's analysis of the two candidates' tax plans, 80% of taxpayers would get more from Obama's cuts than from McCain's. About 95% of taxpayers would pay less under Obama than under current law (which ends many of the tax breaks passed in the past decade).
You might not know this if you've been reading the business press or watching cable news. The coverage has tended to focus on Obama's plan to raise the tax on capital gains, rather than on his $500 across-the-board tax credit, or his proposal to extend the mortgage interest deduction to more taxpayers.
The 2001 and 2003 tax cuts were tilted heavily toward the rich, who were supposed to return the favor by creating more jobs and investing in America's productive capacity. Unfortunately, the main impact of the tax cuts was to further widen the gap between the richest Americans and the rest of us. Job growth was extremely weak, as was capital spending.
Doing nothing on taxes isn't really an option for the next president and the Congress he'll work with. Most of the tax breaks passed in 2001 were designed to self-destruct over the next few years. If Congress and the president don't act, taxes will go up for almost everyone.
The question now is whether to just extend the earlier laws, or do something else.
A closer look at the proposals
McCain's proposed tax cuts would give the top 0.1% of taxpayers (those earning more than $2.8 million a year) a tax break averaging $678,000. Obama, by contrast, would raise taxes on that group by an average of $300,100. For the bottom 20% of taxpayers who make less than $19,740 a year, McCain would cut taxes by an average of $101, while Obama would cut their taxes by an average of $698.
Obama has not made taxes an issue so far, maybe because it isn't a big deal in Democratic primaries, or maybe it's because his views are too complicated to put on a bumper sticker, or maybe he fails to realize how much he has to gain from touting his plans.
Democrats have let Republicans walk all over them on taxes. Even when Democrats deliver lower taxes for working Americans, they let Republicans take the credit. That's just dumb, and it's probably a sign that even Democrats have bought into the Republicans' constant refrain that Democrats love to tax.
In 2001, Democrats in the Senate forced President Bush to accept bigger and quicker tax cuts for poor and middle-income taxpayers, but then the party threw away any goodwill it could have gained by demonizing the whole package as "the Bush tax cuts."
Obama could break that pattern by advertising himself as a tax-cutter. Of course, McCain is proposing to cut taxes even more than Obama is. Under Obama's plan, tax receipts would fall by $2.7 trillion over the next 10 years, while McCain would cut taxes by $3.7 trillion, compared with current law.
As a share of gross domestic product, tax receipts would fall from 18.8% currently to 18.5% by the end of his first term under Obama's plan, while McCain would lower receipts to 17.6% of GDP.
But Obama can't cut taxes too much, because there are many jobs he wants Washington to accomplish, such as universal health care, affordable college, and research on promising new energy sources.
If he doesn't want to be pigeon-holed as a tax-and-spender, Obama will have to start telling the story about his tax cuts. End of Story
Rex Nutting is Washington bureau chief of MarketWatch.
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I have no idea if this is true : "80% of taxpayers would get more from Obama's cuts than from McCain's" so I'll assume it is. The problem is the bottom 75% (don't have the bottom 80% numbers, this is close enough) only pay 14% of the total income tax so there's not a lot of savings for "normal people" there, even if there are some.
Before I make any criticisms - believe me that I do want "normal people" to do well and have good jobs. Heck, I'm an engineer - a normal person.
But the fly in the ointment to me is what he does with capital gains/dividends taxes; he's already had to retreat from his plans there to some extent. A lot of normal people have their retirement in stocks and would be paying more under Obama that could easily offset the relatively small savings they might get from income tax. To me it's like buying a car while trading one in, there's parts moving from both ends. Keep investment taxes the same and tell me what the numbers are then we can talk. As it stands I think a lot of "normal people" would be unpleasantly surprised.
It's kind of why I posted it. There are several people here better on the economy than I am (I try...but my eyes glaze over when I start reading economic theory...it's a seriousl weakness).
But I thought it was interesting from marketwatch.com.
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The other thing that strikes me is the 80% number. The cutoff to be in the top 20% is about $85K, according to the chart I'm looking at. Good money for sure but not "rich", certainly not in a big city. Even the top 5% would would pay more than they do now, the cutoff for the top 5% is about $160K. Now that's VERY good money but if you live in Boston, Chicago, L.A., etc, making that with a family I'm not sure you want your taxes raised. To get to those making $250K+, a more reasonable definition of rich to me, but still not close to "filthy rich" you have to hit only the top 1.5%.
Speaking for myself, and I'm not typical as I like to save money for investing, I would prefer no increase in Capital Gains even if it means no reduction or even a small increse in income tax. As I grow older and my investments grow, capital gains tax will outweigh income tax.
The other thing that strikes me is the 80% number. The cutoff to be in the top 20% is about $85K, according to the chart I'm looking at. Good money for sure but not "rich", certainly not in a big city. Even the top 5% would would pay more than they do now, the cutoff for the top 5% is about $160K. Now that's VERY good money but if you live in Boston, Chicago, L.A., etc, making that with a family I'm not sure you want your taxes raised. To get to those making $250K+, a more reasonable definition of rich to me, but still not close to "filthy rich" you have to hit only the top 1.5%.
Speaking for myself, and I'm not typical as I like to save money for investing, I would prefer no increase in Capital Gains even if it means no reduction or even a small increse in income tax. As I grow older and my investments grow, capital gains tax will outweigh income tax.
Me too. Almost all my extra money goes to the stock market....
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Me too. Almost all my extra money goes to the stock market....
try mutual funds
the stock market is run by criminals.
The economy isn't driven by rich people, its driven by consumers. If ordinary people have money, they tend to spend it. Rich people tend to try and get richer.
McCain's tax plan will fukc you in the earhole unless you are uber wealthy or have a sum of $$ coming to you.
Try something which is a subset of something run by criminals ?
subset.......
You are hedging your bets against the criminals by diversifying with mutual funds.
knowing that the market is fueled by criminals...having the mutual fund allows for faster liquidity so you can get the f out when the getting is good. try doing that with a CD or a bunch of bonds.
Taxes--Obama v. McCain
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