Saturday, September 13, 2008

Facts about their tax plans

One of the chief reasons my Republican family is voting McCain is that they think Obama will raise their taxes. And, perhaps he will, since some members of my family make a whole lot of money (a lot more than the typical middle class family who earns less than $250,000 per year). If, however, you fall into that vast group of families who earn under the quarter million a year mark, there is good news for you. Obama will help you more.
McCain's new ad says that Obama plans to impose "painful tax increases on working American families" and past ads have said Obama wanted to raise taxes on "families" making just $42,000 a year.

Here's the truth: Obama's plan would substantially cut taxes to all but the wealthiest families — far more than McCain's tax plan would. But if you're yearning for some more hefty tax cuts for the nation's rich, then McCain's your man.

The nonpartisan Tax Policy Center has analyzed both campaigns' tax plans and found that Obama's would cut taxes for 81.3 percent of all households and for 95.5 percent of households with children.

Going with Obama's plan, according to the center, would reward middle-income taxpayers to the tune of $2,200 in tax cuts annually by 2012. While taxpayers in the top 1 percent of income would face an average tax increase of $19,000.

Under McCain's tax plan, middle-income taxpayers would see a rise of $1,400 in after-tax income by 2012. But for those in the top 1 percent, McCain would cut their taxes by more than $125,000 annually.

McCain's plan would increase the national debt by $5-trillion by 2018, while Obama's plan would increase it by $3.5-trillion, according to the center. Yet McCain's ads warn that Obama's plan would bring about "years of deficits."
Check out the whole article.


Kansas Bob said...

I support Obama's take on taxes but I wonder how you would convince people who make $250,001 that it is ultimately good for them?

julieunplugged said...

I don't think you can convince them unless they are able to see that they can contribute to the common good through their larger share. I used to believe everyone ought to be taxed similarly. I understood that argument until I realized that for the well to do (my family of origin), they also enjoy a greater chance of health care, job security, tax shelters, and so on.

Kansas Bob said...

I think that I would agree if we weren't talking about the government. If I were rich I think that my concern would be that I would be losing money and the government wouldn't really do anything for the poor.. it is like a used car salesman asking you to trust him.. it just doesn't come natural.

julieunplugged said...

I think I can agree with you. I used to feel that way and I definitely see the dangers in asking the government to be in charge of stuff. I just don't know what the alternative really can be! The gap between what CEOs and workers earn is at an all-time high. There is little incentive to take care of the people they lead...

If health care is tied to your job, then you are at the mercy of the bottom line of your company. How fair is that?

So I wonder how we are going to tackle that stuff if we don't use the government to do it.

timothyjchambers said...

Great posts on the election Julie... here is a good graphic comparing the Obama v McCain tax plans and who benefits and who pays in each:

julieunplugged said...

That is a fabulous graphic! Thanks. Makes it clear.

Kansas Bob said...

I liked the graphic as well.

Part of the problem with the tax-the-rich idea is that the most wealthy amongst us don't pay income taxes and really wouldn't be affected.

The disparity of corporate compensation is one of those moral issues that Republican's don't like to talk about.. of course I doubt that Democrats will do anything about it.. didn't when they had a congressional majority.. it is all a part of a larger problem that government isn't (and probably won't be) dealing with.

I share your concern about health care and I think that I would be willing to transition everyone to Medicare.. of course I am there in 6 years. Do you think that you would be willing to put everyone on Medicare-like coverage? What would it do to the medical and insurance industries?

So I guess my concern about voting Obama.. and I am definitely leaning his way.. is that he seems to advocate that government is the answer to our problems. I struggle with that idea because government hasn't offered much to us in the way of solutions for a long time.

Why do you believe that an Obama administration will be different Julie?

brian said...

One thing about this tax raising thing...

As Obama points out, we have to pay for the services we receive. In America, we have a progressive income tax. I might not like writing that check, as he points out. But, it's part the price we pay for living in America. If you're making above $250,000 (net) income a year, you can afford to pay a little more. And, think of it this way. The huge deficits we're running now hurt everybody. As a business owner, I hope the tax cuts will improve my customers' situations and they'll be able to afford to buy more products, making more money for me and giving me the money to pay those higher rates

BTW, what people are calling a tax increase is really just stopping the tax breaks the rich have been given for the last several years. It's not increasing the tax rates any higher than they were under the Clinton administration.

Lastly, Bob. I can tell you there are people in that $250,000 range who do pay taxes, a lot of taxes. Not everybody can take advantage of the infamous loopholes. But, you're right, the ultra-rich do find a way to avoid taxes. Sometimes entirely.

Watchman said...

I don’t agree with punishing the rich for their wealth as it gives them no incentive to do business.

The father of my financial advisor stopped working under Carter since his taxes were so high. He had no reason to continue trying to expand his business since the bulk of it went to the government. Once Reagan got in office and dropped the higher end tax rate, he decided to get back to work and opened eventually a very successful title company. Poop poo trickle down economics, if you will, but he is my example that the rich do have something good to offer.

I myself as a business owner fear that if I succeed, I may end up in the same boat.

brian said...

Taxes, while they might feel like a punishment, are not punishment. And it's only the marginal rates that are outrageous for the rich. The government does not take all of your money as you become more successful, just a larger portion of the amount that's up in the stratosphere anyway.

I've had my eyes bug out a few years when I hit some pretty high marginal rates. But, you know what? I was glad to have the opportunity to have to pay that amount in taxes. No one wants to pay taxes. We all want to keep as much money as possible in our pockets. Our government needs to raise revenues, cut spending or both. There are no painless solutions.


NoVA Dad said...

One thing to keep in mind about any tax cut: if your personal taxes are cut, but taxes on corporations and businesses are increased, then those increases will be passed on to you. So even if you've got more take-home pay at the end of the week, the possibility exists that gasoline tax, tax on groceries, tax on clothing, etc. will increase -- and they end up zeroing each other out. Plus, if taxes on businesses are increased, there's less money for infrastructure improvements, expansion, and hiring of additional workers.

Speaking here, of course, less as a Republican (the party which I think has moved left of me fiscally) and more as a conservative. Thanks for starting this dialogue here, Julie; it's an important one.

Dave said...

Matt (nova dad),

We've all been living through years of tax cutting and deficit spending with the promise that this approach will create jobs and that the surplus wealth of those at the top of the economic process will trickle down to the benefit of the rest of us. But my experience is that even if we get a modest reduction of income taxes, the fees and other core costs of living have been going up up up while wages remain stagnant, property values go down, and when we do need government services, the quality and efficiency of them has been seriously compromised as well. To me it seems like the people making the most money are mainly just piling it up or investing it in businesses and other operations that don't really benefit working-class Americans. So I don't see any merit in continuing that approach based on the kind of conventional wisdom you put forward here. Gas, groceries and clothes are all more expensive now but a lot of people who are working hard are NOT getting pay increases and have extremely limited opportunities to improve their financial situation. Who is advocating on their behalf at the federal level? Bush hasn't done anything to improve the situation (the stimulus checks basically helped families pay off old debt and keep their heads above water for another month or two.) Now McCain says that he "won't let this happen again." That's like saying "the US won't invade Iraq again!" Too late - the horse is already out of the barn and the calamity is underway. Voting for four more years of this is nothing more than rewarding greed and incompetence.

NoVA Dad said...

You make a good point, Dave, but to be fair it takes two to tango -- and as the partner in the legislative process the current party in power in Congress hasn't done anything, either. It has taken both parties to get us to this point over the years, and it's going to take both parties to get us out of this mess we're in. Sadly, folks on both sides of the aisle in the House and Senate are more concerned about political posturing and raising money for reelection than they are doing anything worthwhile.

I've heard the argument made that the two party system is gone, and that liberals and conservatives in Congress are just the left and right sides of the same situation...