Whose Tax Breaks Will Help You More?

Obama and McCain Tax Proposals

According to a new analysis by the Tax Policy Center, a joint project of the Urban Institute and the Brookings Institution, Democrat Barack Obama and Republican John McCain are both proposing tax plans that would result in cuts for most American families. Obama's plan gives the biggest cuts to those who make the least, while McCain would give the largest cuts to the very wealthy. For the approximately 147,000 families that make up the top 0.1 percent of the income scale, the difference between the two plans is stark. While McCain offers a $269,364 tax cut, Obama would raise their taxes, on average, by $701,885 - a difference of nearly $1 million.

From The Washington Post Ok, the thing I can't get is how the American public is responding to Republican claims that "Democrats will increase your taxes." This has been the tenor for the past few days, and Palin's speech in Reno today was no exception. Republicans are lambasting Democrats and claiming they will tax Middle America to death. What the Hell people? People, seriously. Look at the chart above. Whose plan will help you? 60% of America makes less than $70,000 a year. Unless I am blind, it is Obama's plan that will benefit them most. And if we move to about $110,000 dollars per year (about 80% of the pop), you still do better under Obama. So how the fuck is it that the Democrats are killing Middle America with taxes? In all fairness, if we include capital gains increases then a bigger chuck will be affected by the Obama plan. But, most of the country that holds stock holds it in pension plans, which are except anyway. So it still doesn't affect them. Still, many people will be pay more, but they will have to subract the increase in capital gains tax from their decrease in income tax to see which benefits them more. So again, what the Hell? And lastly, most economists, inlcuding Greenspan, have said that whoever is the new President, they will have to raise taxes unless they plan to cut spending. Where is there to cut spending when the War is eating $400 million dollars per day? Ugh...why bother. How many people vote based on real numbers anyway? I am beginning to think that symbolic politics and celebrtiy matter more than anything else. Even people who would benefit from Obama's plan like to think that one day they will be in the top %15 so on principle and flawed expectation they want to keep taxes low on the upper class.

The McCain Tax Increases

Douglas Holtz-Eakin, a former Director of the Congressional Budget Office and current chief McCain economic advisor, is an honest man--which means he's something of a liability on the Straight Talk Express. A few months ago, he admitted to my colleague, Michael Scherer, that Barack Obama's economic plan would reduce taxes for most people. And now, in a forthcoming book by Fortune columnist Matt Miller, he makes it clear that the next President is going to have to raise taxes.

"If you do nothing on the spending side, you're going to have to raise taxes whether you're a Republican, a Democrat or a Martian," he tells Miller...and then he immediately makes it clear that the "spending side" part of the argument is nothing more than a political fig-leaf.

"It's arithmetic." Federal revenue today is 18.8 percent of GDP and federal spending is 20 percent. Holtz-Eakin observes that "the pressure are there" to lift spending [on entitlement programs, mostly] and taxes to 23 or 24 percent of GDP by around 2020, and to as much as 27 percent if health costs remain out of control.

Miller does the arithmetic: that's an annual tax hike of $550 to $700 billion, well beyond the range of any spending cuts that McCain has or might propose. (Those vaunted earmarks cost about $20 billion per year.)

It should be noted that Obama's proposed middle class tax cuts are nearly as foolish--and unlikely, in the long term--as McCain's, although Obama claims to pay for them by closing corporate loopholes and raising the top marginal tax rates to Clinton-era levels.

But it's John McCain who has opposed any and all tax increases, sort of--as I reported yesterday, McCain would tax employer-provided health care benefits. (He would also raise energy costs significantly with his cap-and-trade carbon emissions reduction program.)

Miller concludes:

So why does tax-cutting mania persist among Republicans, I asked Holtz-Eakin, the McCain adviser--given...that, as Holtz-Eakin himself explain to me, taxes soon have to go up substantially in any event?
"It's the brand," he said, "and you don't dilute the brand."

Miller's book, The Tyranny of Dead Ideas, will be published by Holt in January 2009. I'm about halfway through reading an advance copy and, as is always the case with Miller, this is a smart, sane and extremely well-written account of our current economic mess.

Update: What Holtz-Eakin admitted to Scherer was that the Obama's plan represented a net tax reduction over ten years.

From: www.time-blog.com; posted by Joe Klein

Food for thought. I had intended to write a long diatribe, but why bother. If people are informed about the realities of politics and the likely outcomes of the two policies sets proposed by the candidates they should probably choose Obama (assuming they are unhappy with the current state of the economy). McCain has offered no viable policies to improve the US economy, just more twists on Reaganomics, and what's worse, they are same one used by the Bush admin. 4 more years; 4 more years!

Wait, I forgot when I posted this earlier, he does have one idea to solve economic problems: "Drill, baby. Drill!" Yeah. super.