Obama and McCain tax plans are both a disaster for America
Posted by Mike Sylvester - 9/1/08 @ 10:53 pm - Filed Under 2008 National Elections, National Politics
Both major party political candidates have released their plans for Federal income taxes and they are scary; very scary.
Please realize that neither candidate will stick to their plans that have been released; however, these plans should give us some insight into what they think should be done with the Federal Income Tax Code.
Both men are saying that they want to make the Federal Income Tax simpler; however, both of their plans look like they would make it more complex. This is a long running theme because the voters want a simpler tax code and both candidates are pandering to voters; however, special interest groups and lobbyists spend billions of dollars trying to get the Federal Income Tax Code modified to help their particular industry and their wishes generally are incorporated into law by Congress whether Congress is led by Republicans or Democrats.
I do not like the tax plans of either McCain or Obama. If someone had a gun to my head and I thought they would shoot me unless I chose one of the plans I would grudgingly choose Obama’s plan.
As you all know I am a small government advocate who has many views that are libertarian and many that are conservative. It should strike you as odd that while I dislike both plans intensely I actually slightly prefer Obama’s plan.
I have reviewed many reports that analyze both plans and the most comprehensive was done by The Tax Policy Center. The Tax Policy Center is a think tank that is considered to be either liberal or left-of-center by the media. In fact the Washington Post and New York Times have both referred to it as liberal.
The Tax Policy Center feels that “Neither plan would significantly increase economic growth unless offset by spending cuts or tax increases that the campaigns have not yet specified.”
Per The Tax Policy Center “Both candidates prefer to compare their plans to the “current policy” baseline, which would extend the 2001 and 2003 tax cuts and indefinitely extend an indexed AMT “patch”—and collect nearly $3.6 trillion less than under current law over the coming decade.”
The above paragraph is just saying that both candidates prefer to have their tax policies compared to a baseline that assumes the AMT is patched and indexed to inflation through 2018 and that the Bush tax cuts are all extended through 2018. If the above assumptions become law this new baseline would add 4.3 trillion dollars to the National Debt NOT counting the other changes listed below. Neither candidate is currently saying they advocate this stance, they just want to use it as the baseline they compare their plans to.
Both candidates are proposing huge tax cuts that will dramatically decrease Federal Income tax revenues. Both candidates are proposing plans that will further subsidize the poor; realize that the poor already get back larger refunds then the amount of taxes paid in; both plans increase that amount!
One of the things I find most interesting about the proposed plans is that both candidates seem to be embracing supply side economics and planning on distributing more money to the tax payers through the Federal Income tax code. Both candidates plan on large decreases in tax revenues with the implementation of their plans.
Per The Tax Policy Center Obama’s plan will add 3.5 trillion dollars to the National Debt due to decreased tax revenues. McCain’s plan will add 5 trillion dollars to the National Debt due to decreased tax revenues. Neither of these numbers are acceptable to me nor should they be acceptable to ANY fiscal conservative. We are just passing on larger and larger debts to future generations.
The next item to look at is how these tax cuts would affect various families in the US. Both plans ensure that the 42% of Americans that pay no Federal income tax already will continue not to pay Federal Income taxes and they that will be even further subsidized by the Federal Government. Both plans ensure that the next 53% of taxpayers will pay less in Federal Income taxes then they paid this year. McCain’s plan also cuts taxes on the top 5%; Obama increases taxes on the top 5%. The breakdown for 2009 taxes is as follows:
Those who make above 2.87 million dollars per year would see an average tax increase of $701,885 from Obama and on average a $269,364 tax cut from McCain.
Those who make between $603,403 and 2.87 million dollars per year would see an average tax cut of $45,361 from McCain and an average tax increase of $115,974 from Obama.
Those who make between $226,982 and $603,402 dollars per year would see an average tax cut of $12 from Obama and an average tax cut of $7,781 from McCain.
Those who make between $160,973 and $226, 981 would see an average tax cut of $4,380 from McCain and an average tax cut of $2789 from Obama.
Those who make between $66,355 and $111,645 would see an average tax cut of $1009 from McCain and an average tax cut of $1290 from Obama.
Those who make between $37,596 and $66,354 would see an average tax cut of $319 from McCain and $1042 from Obama.
The two below brackets do not pay income tax; in fact they all receive more money back from the government then they pay into the Federal income tax system.
Those who make between $18,982 and $37,595 receive a subsidy from the Government through their tax returns; on average with McCain’s plan this will increase by $113 and with Obama’s it will increase by $892.
Those who make between 0 dollars and $18,981 receive a subsidy from the Government through their tax returns; on average with McCain’s plan this will increase by $19 and with Obama’s it will increase by $567.
Both of these tax plans are completely fiscally irresponsible for many reasons:
1. They increase the National Debt by trillions of dollars.
2. They further subsidize the poor.
3. These plans will not facilitate a significant amount of economic growth.
4. Both plans will make the tax code more complicated.
I oppose both tax plans; however, I slightly prefer Obama’s tax plan since it will increase the National Debt by a smaller amount.
Mike Sylvester
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6 Responses to “Obama and McCain tax plans are both a disaster for America”
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So not only would Obama not add as much to national debt, but he’ll also put more money into the pockets of virtually every FWP reader.
Would either candidate be able to pass this plan in its entirety? Of course not, especially Obama. The only way to provide relief to the poor or middle class in this country is if you buy off the rich first.
Adding more to the debt is very troubling to me as well but we seem to be in the minority on that one Mike. Of course we’re also living in a country with a negative savings rate so I guess it shouldn’t be any surprise that the government doesn’t seem to care about fiscal responsibility.
Our own previous city council couldn’t seem to grasp the basics of taxation 101. Last year they cut the levy but didn’t cut an equivalent amount of spending - setting us up for the current fiscal crunch we have now.
And the current council is stuck trying to clean up their mess in the wake of HEA1001…
Jeff;
When you say “So not only would Obama not add as much to national debt, but he’ll also put more money into the pockets of virtually every FWP reader.” I think you overstate the case.
The only part of either candidates plans that has any merit for consideration is what they plan to spend. Tax cuts or rebates mean absolutely nothing.
When either candidate proposes to cut government revenue, while at the same time both are increasing spending, they are simply lying. George Bush recently gave me a check for $500. At the same time, he also gave me a bill for $500 payable to the Chinese government. So in reality, he really gave me nothing.
So factor out any money Obama promises to hand to us,because you can guarantee there will be an equal bill attached to it (payable in Chinese Yen, please.)
Jeff,
That is why if push came to shove I would slightly prefer Obama’s plan.
The truth of the matter is both plans are completely unacceptable and should be scrapped. Both lead to even larger Federal deficits and ultimiately a much higher National Debt.
Mike
The only way to reduce taxes is to = cut spending.
[...] both candidates’ tax and spending plans are a disaster. Both of them make me very depressed. McCain’s plan will increase the deficit more than [...]
The 3rd nonsensical debate is on, with both candidates attempting ultimate smackdowns while avoiding discussion of serious issues.
Whoever wins inherits the trailer-trash economic policies of the Arkansas/Texas axis which got us into this mess. One for all and all for one, we’re stuck with the Wal-Mart model of how the world works. China makes it, we consume it. Over the last 16 years our appetites have outrun our income.
I noticed a couple of years ago what happens when you use home equity to buy a car. You spread the term out, but you pay way more. A $25,000 car became a $70,000 car, because it took 5 years of house payments to get back $25,000 in home equity. The same thing happens with the national debt. By its very magnitude we have insured that we will never reduce it. This is the heart of what I call trailer-trash economics: E-Z payments allow you to own something you can’t afford.
Sorry to say, whoever wins this year will be hated by this time next year unless they can figure out a way to make the Titanic float. I wish they’d talk about how they were going to do that in their debate.