Tuesday, October 28

Tax Plan Comparison

The economy has gotten a lot of attention over the last several weeks. A lot of the discussion has centered around the tax plans of each campaign. To help break down the facts from fiction, here is a summary of agreements and differences in the two plans.

The candidates do have some large areas of agree­ment. Both agree that:

  • The Alternative Minimum Tax (AMT) should be indexed for inflation to prevent more and more taxpayers from being forced to pay the AMT. Senator McCain wants to increase the AMT exemption even more in future years;
  • Many elements of the Bush tax cuts should be made permanent, such as the child tax credit, provisions that reduce the marriage penalty, and lower tax rates for most income brackets.
  • The capital gains tax rate and the tax rate for qualified dividends should be equal; and
  • The portion of estates that is tax exempt should be increased. (The candidates differ on lowering the estate tax rate. McCain wants to increase the exemption to $5 million and supports a tax rate of 15 percent while Obama wants to keep the exemption at the 2009 level of $3.5 million and supports a tax rate of 45 percent).

Of course, there are many large differences in how each candidate would approach taxes in their economic plans.

Senator McCain's plan extends all of the Bush tax cuts, while Senator Obama's does not extend the cuts for the top two rates.

Senator Obama would impose a new tax on those who earn more than $250,000 a year, which would be dedi­cated to paying for Social Security.

Senator McCain has proposed a few other cuts, highlighted by a cut in the corporate tax rate and a change in the tax treatment of health care.

Senator McCain's tax plan for health care is the following: Currently, workers do not pay tax on the value of insurance they receive from their employers. Senator McCain would end this preferential tax treatment and replace it with a tax credit that would allow families to purchase health insurance.

Senator Obama has many new proposals, including several new tax credits. Senator Obama proposes a refundable health care tax credit to help low-income individu­als purchase health care. Many of the other ele­ments of Senator Obama's health care plan are outside the income tax system, such as issuing mandates that children have health insurance.

sources: Heritage Foundation, John McCain.com, Barack Obama.com



blogger templates | Make Money Online