A Practical Choice for President: Taxes
This explores the choice for President from the perspective of an average, middle class American who is concerned about saving money on his taxes in these hard economic times.
A Practical Choice for President: Taxes
This article explores the choice for President from the perspective of an average, middle class American who is concerned about saving money on his taxes in these hard economic times. I did my research and read all the information I could find on the two candidates, Senator Barack Obama and Senator John McCain, concerning their tax proposals. My first point of reference was the candidate’s own websites. After all, the best information should come from the horses mouth shouldn’t it?
Senator Obama’s Plan
First I looked at Senator Obama’s tax proposals as listed on here. Boiling it down, the low income voters will get the biggest tax breaks. The middle class taxpayer has either a tax cut or the same taxes as they currently pay up to $250,000 dollars of income per family. Above the $250,000 level your taxes most likely would increase. The increases in taxes would affect approximately the top 5% of American income earners.
Senator McCain’s Plan
I then looked at Senator McCain’s tax proposals as listed here. The only thing I could find on his site was that he would keep the top tax rate at it’s current level and not raise the tax rate on capital gains. These items would certainly benefit the upper class voter but not benefit nearly as much the lower or middle class voter. Strangely enough Senator Obama’s site did give Senator McCain credit for a dependent tax credit that would save voters with children $125, but I couldn’t find that information on Senator McCain’s own site.
So according to the candidate’s own websites Senator Obama is the practical choice to vote for if you are a lower or middle income taxpayer.
Independent Tax Experts
Considering the complexities of taxes I felt that perhaps it would be a good idea to check with some experts. I went looking for a non-partisan organization that reviewed the candidates tax proposals and found the Tax Policy Center. When you look at the information provided by the Tax Policy Center website things get even more interesting.
The Center has a 45 page document that compares the candidate’s tax proposals against the currant tax policies. It goes into a lot of analysis that is sure to make accountants and economists happy, but can be very confusing to the average person. The summary section is the easiest to understand for the average tax payer. There are two charts in the summary section that show the increase or decrease after tax income for each income level. The income levels are broken up into five 20% brackets. The charts are on pages 41 and 42.
How do the candidates compare with each other according to the Tax Policy Center? If you are in the bottom 80% of income earners you will have more net income, after the tax man has had his share, with either candidate, but you will do a lot better if you have Senator Obama in office rather than Senator McCain. If you are in the top 20% of income earners your net income is likely to be less under Senator Obama’s plan and more under Senator McCain’s. The tricky part comes in as to where the actual dividing line really lies. It is somewhere in that top 20% bracket.
A Clearer Picture
To get a clearer picture of where the dividing line really was I did some more research and found that the Washington Post on-line newspaper has a really good chart that displays exactly where the dividing line falls. The Washington Post created the chart from the information from the Tax Policy Center.
According to the Washington Post if your family makes between $227,000 and $603,000 you will have a zero tax increase under Senator Obama’s plan. Above the $603,000 dollar level you will have increased taxes, this level equates to the top one percent of Americans. At the bottom of the income spectrum where 60% of Americans live, they would receive an average of 3.8% in tax breaks or about $833 each.
The Washington Post’s chart shows for Senator McCain’s plan families making over $2.8 million would receive the largest tax break of 4.4%. For 60% of Americans in the lowest income brackets Senator McCain would give an average of .46% in tax breaks which averages out to $150 each.
It is clear that for approximately 95% of Americans Senator Obama is the winner when it comes to taxes especially if you’re in the lowest income levels. However the top 1% to 5% of Americans would probably do better to vote for Senator McCain. It appears Senator Obama’s tax philosophy is: the less you make the more help you should get. Senator McCain’s tax philosophy is: the more you make the more you should be rewarded. Hard economic times would seem to dictate that Senator Obama is a more practical choice for lower and middle class Americans.