The Candidates' Tax Plans
by Elisa
Tue Jun 17, 2008 at 12:12:23 PM PDT
The Urban Institute research center recently dissected the candidates' tax plans and listed them nicely with bullet points:
• Senator McCain would permanently extend the (Bush) 2001 and 2003 tax cuts, increase deductions for taxpayers supporting dependents, cut the corporate income tax rate, and allow immediate deductions for the cost of certain capital equipment.
• Senator Obama would permanently extend particular provisions of the 2001 and 2003 tax cuts, primarily for taxpayers with incomes under $250,000; increase the maximum rate on capital gains and dividends; and enact new and expanded targeted tax breaks for workers, retirees, homeowners, savers, students, and new farmers.
• Both candidates would—in very different ways—extend the (Alternative Minimum Tax) AMT patch, increase the estate tax exemption, reduce the estate tax rate, broaden the tax base, and reduce corporate loopholes...
• Using a “current policy” baseline (where the AMT patch is made permanent and the 2001 and 2003 tax cuts are extended), Obama’s proposals would raise $730 billion and McCain’s proposals would lose $250 billion.
• The two sets of proposals would have markedly different impacts on different income groups. Obama would raise taxes on the wealthy to help pay for middle- and lower-class tax cuts; McCain would sharply reduce taxes for the wealthy at the cost of smaller tax cuts for other income groups.
• In 2009, under Obama’s plan, households in the bottom fifth of the income ladder (those making below $18,981 in 2008 dollars) would receive an average tax cut equal to 5.5 percent of their income. Those in the middle fifth ($37,595 to $66,354) would get an average tax cut amounting to 2.4 percent of income. In contrast, taxes would rise by an average 2.0 percent of income for the those in the top fifth ($111,645 and up), with an average 8.7 percent of income increase levied on those in the top 1 percent of households ($603,402 and up). The richest 0.1 percent ($2,871,682 and up) would see an average tax increase of 11.5 percent of income, or $701,885.
• In 2009, under McCain’s plan, households in the bottom fifth of the income distribution would get an average tax cut of 0.2 percent of income, compared with 0.7 percent for those in the middle fifth. The top 20 percent of households would receive an average tax cut of 3.0 percent of income. The top 1 percent would see their taxes fall by an average of 3.4 percent of income, while the richest 0.1 percent would see an average tax cut of 4.4 percent of income, or $269,364.
You can't get more different plans than that. I am still failing to understand how the regressive tax code -- making the rich pay a lesser percentage of their income -- stimulates the economy?
According to Urban Institute, if the candidates were to keep the AMT the same, "the candidates’ non-health tax proposals would reduce revenues by $3.7 trillion (McCain) and $2.7 trillion (Obama) over the next 10 years."
I'd like to see our candidates' plans to tackle the deficit. Yikes.

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