The Facts on Obama’s and McCain’s Tax Plans

List by: Picka

Last Updated: 9/2/2008

The Tax Policy Center conducts detailed analyses of the tax plans proposed by both McCain and Obama. They continually update their analyses based on the latest information submitted by their respective campaign economic advisors.

Overall effect of tax proposals must consider entire plan.

One cannot draw conclusions by analyzing any piece of the tax plans in isolation. The Tax Policy Center runs full calculations including all proposed provisions, deductions, exceptions, and other taxes for various income levels and family status.

Obama’s Tax Plan favors low and middle income families.

Obama would reduce taxes for low and moderate income families, but raise them for high incomes ^[1]

By 2012, middle-income taxpayers would see after-tax income rise by about 5%, a yearly tax cut of $2,200. ^[1]

Top 1 percent would face a $19,000 average tax increase - a 1.5 percent reduction in after-tax income. ^[1]

Families making more than $250,000 will pay the same or lower tax rates than they paid in the 1990s. ^[2]

McCain’s Tax Plan favors the rich.

McCain would lift after-tax incomes about 3%, or a tax cut of $1,400 annually for middle income taxpayers ^[1]

McCain would cut taxes for the top 1% by more than $125,000, raising their after-tax income 9.5%. ^[1]

Obama’s top two income tax brackets go up for the top 1.5% households by income levels.

Tax brackets under current law will automatically revert to the levels of the Clinton Administration in 2011 unless Congress takes action. The Bush tax cuts of 2001 and 2003 were temporary measures to give back to citizens the surplus in tax revenues from the Clinton administration. According to the US Census Bureau, (Wikipedia - Household Income) household incomes of $250,000 or more represent 1.5 percent of all households.

McCain would make permanent the Bush tax cuts. The current 10, 15, 25, 28, 33 and 35% would remain. ^[1]

Obama would retain lower brackets, but let the upper two brackets revert to Clinton's 36% and 39.6%. ^[1]

Obama’s capital gains and dividend taxes go up for the top 1.5% households.

Obama would raise the capital gains tax rate from 15% to 20% for those making over $250,000 per year. ^[2]

Families w/ incomes below $250,000 would pay current capital gains rates (max 15% on assets held a year). ^[2]

Top dividend rate would remain at 15% for those earning less than $250,000; but 20% above that income. ^[2]

For single people, the tax increases above would apply to those earning more than $200,000. ^[2]

McCain would leave the Bush tax cuts for capital gains and dividends unchanged. ^[3]

McCain’s Estate Tax plan favors the very rich.

McCain would set the Federal estate tax at 15% for estates above $5 million ($10 million for couples). ^[3]

Obama would set the Federal estate tax at 45% for estates above $3.5 million ($7 million for couples). ^[2]

The estate tax under Obama’s Plan would be effectively repealed for 99.7 percent of estates. ^[2]

Obama has a real plan to fund Social Security for the future.

Obama's plan calls for taxing income over $250,000 (but nothing on income between $102,000 and $250,000). ^[2]

The increase of 2% to 4% world be deferred about 10 years until SS revenues no longer exceed outlays. ^[2]

McCain has called Social Security a disgrace. “It's an absolute disgrace, and it's got to be fixed." ^[4]

"I want young workers to be able to take part of their own money...and put it in a [private account]." ^[4]

McCain has provided no details on how his “privatization plan” would work. ^[4]

Corporate tax rates will remain unchanged under Obama and go down under McCain.

Obama would leave the top corporate tax rate at 35 percent. ^[2]

McCain would cut the top corporate tax rate to 25 percent. ^[3]

Obama would eliminate capital gains taxes for small businesses. ^[2]

Obama would cut corporate taxes for firms that invest and create jobs in the United States. ^[2]

Obama would provide tax credits to reduce the cost of healthcare and to reward investments in innovation. ^[2]

McCain’s campaign ads and statements "take pride in ignorance".

McCain falsely claims that raising the capital gains tax would directly effect on 100 million Americans, and that Obama has no understanding of the economy. ^[5]

McCain shows ignorance. Stock gains in 401k’s, IRAs, and annuities are taxed as ordinary income. ^[5]

McCain ads state that Obama will raise your taxes. That’s true if you are making over $250,000 per year. ^[6]

McCain says he will “permanently repeal the AMT”. Not true according to his economic advisors. ^[1]

Quotes/Facts/Assessments of Tax Plans from 3rd Parties

Obama's Tax Plan adds up. Proposals would raise $600 billion and McCain's would lose a similar amount. ^[1]

McCain's Budget figures don't add up. ^[6]

Fanciful proposition that he can extend Bush tax cuts, add more breaks - and still balance the budget ^[6]

McCain plan would benefit the most fortunate taxpayers, offering 2 new massive tax cuts for corporations. ^[7]

McCain plan would deliver 58 percent of its benefits to the top 1 percent of taxpayers. ^[7]

By comparison, the Bush tax cuts provide 31 percent of their benefits to the top 1 percent of taxpayers. ^[7]

McCain cannot pay for his tax cuts without massive reductions in Social Security, Medicare, or other... ^[7]

Categories: Taxes
People: Barack Obama & John McCain

List Views: 545

List Sources

[1]
Article: Updated Analysis of the 2008 Presidential Candidates’ Tax Plans - Tax Policy Center, Thursday, August 28, 2008
[2]
Link: Barack Obama's Comprehensive Tax Plan - Saturday, August 30, 2008
[3]
Link: John McCain Tax Cut Plan - Saturday, August 30, 2008
[4]
Article: McCainTakes a Social Security Risk - L. A. Times, Monday, July 14, 2008
[5]
Article: More Evidence John McCain is Cluless When it Comes to the Economy - Progressive Politics Examiner, Monday, April 28, 2008
[6]
Article: Obama Rapid Response to McCain "millions" ad - Chicago Sun Times, Wednesday, August 20, 2008
[7]
Article: Five Easy Pieces and Two Trillion Dollars - Center for American Progress, Friday, March 21, 2008