Tax analysis: McCain vs Obama

[H]

CNNMoney posted this interesting analysis by the Tax Policy Center on their website this morning:

 

What they'll do to your tax bill

 

It may surprise some.

 

 

__________________McCain_____________Obama

Income___________Avg. tax bill__________Avg. tax bill

Over $2.9M_______-$269,364___________ +$701,885

$603K and up_____ -$45,361____________ +$115,974

$227K-$603K_______-$7,871_____________ +$12

$161K-$227K_______-$4,380_____________-$2,789

$112K-$161K_______-$2,614_____________-$2,204

$66K-$112K________-$1,009_____________-$1,290

$38K-$66K_________-$319_______________-$1,042

$19K-$38K_________-$113_______________-$892

Under $19K_________-$19________________-$567

 

 

Some quotes from the article regarding the national debt and deficit spending:

 

Under both plans, all American taxpayers could pay a price for their tax cuts: a bigger deficit. The Tax Policy Center estimates that over 10 years, McCain's tax proposals could increase the national debt by as much as $4.5 trillion with interest, while Obama's could add as much as $3.3 trillion.

 

How the candidates' tax plans would affect economic growth is an open question. "It depends on how the deficits are closed," said Tax Policy Center director Len Burman in a call with reporters.

 

Tax studies have shown that when tax cuts are deficit funded and they're paid for by raising taxes in the future, "the economy is worse off than if you didn't cut at all," Burman said.

[rockmom]

This is some food for thought...I'll have to digest this. Off the cuff, until the >$161K threshold is reached, all things are fairly equal, IMO.

[H]

Agreed. Tax policy is complicated, so understanding how these numbers were developed and the underlying assumptions is important. However, since many take it as a given that Obama will raise their taxes (and I doubt many of these folks bring in >$227K/year), I thought this was worth posting.

[lynks66]

Agreed. Tax policy is complicated, so understanding how these numbers were developed and the underlying assumptions is important. However, since many take it as a given that Obama will raise their taxes (and I doubt many of these folks bring in >$227K/year), I thought this was worth posting.

 

I wonder what effect (or maybe affect not sure which is correct here?) Raising the tax burden on higher income individuals will have on our economy down the road. +$701,885 seems like a huge increase on an individual's tax burden. Or maybe I am reading the chart incorrectly?

[rockmom]

I wonder what effect (or maybe affect not sure which is correct here?) Raising the tax burden on higher income individuals will have on our economy down the road. +$701,885 seems like a huge increase on an individual's tax burden. Or maybe I am reading the chart incorrectly?

 

If I have done my calculation correctly it equates to 24%, based upon 2.9 million

[lynks66]

If I have done my calculation correctly it equates to 24%, based upon 2.9 million

 

That sounds like a huge percentage of increase doesn't it? I mean if my tax burden were to go up 24% next year, I would not be too happy about it.

[woodsrider]

If I have done my calculation correctly it equates to 24%, based upon 2.9 million

So if I understand the chart correctly Obama is wanting to raise that groups taxes 24%? Does anyone know what % that group already pays?

[Jumper_Dad]

So if I understand the chart correctly Obama is wanting to raise that groups taxes 24%? Does anyone know what % that group already pays?

 

Tops out at 35% of earnings already.

[H]

So if I understand the chart correctly Obama is wanting to raise that groups taxes 24%? Does anyone know what % that group already pays?

 

The top federal tax bracket currently is about 35%.

 

FYI--I also found this Wikipedia site showing the lowest and highest federal tax brackets all the way back to 1913. Interesting that the top federal income tax rate was greater than 60% from 1932-1981 (over 82% between WWII and 1964!) and up until 1986 was 50%.

 

http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#History_of_top_rates

[rockmom]

Let me ask this, in reading the article, I don't get the impression that the data supplied represents the % or $ amount of increase, rather that it represents the % or $ amount of the tax burden in the listed income brackets.

 

Am I missing something?

[lynks66]

Let me ask this, in reading the article, I don't get the impression that the data supplied represents the % or $ amount of increase, rather that it represents the % or $ amount of the tax burden in the listed income brackets.

 

Am I missing something?

 

I thought it was saying how much in regard to dollars it would increase or decrease? Now I am confused.

[H]

I thought it was saying how much in regard to dollars it would increase or decrease? Now I am confused.

 

The way I read the table, the numbers reported are the amount of change in federal tax bill as a function of gross income level. Note that there are + and - signs in front of each number, which correspond to whether it is a tax increase or a tax cut.

[woodsrider]

I thought it was saying how much in regard to dollars it would increase or decrease? Now I am confused.

That is how I took it because of the +/- in front of the dollar figure. If that is what it means then Obama is wanting the top bracket to pay over 50% of their money in taxes. That is absolutely insane.

[lynks66]

The way I read the table, the numbers reported are the amount of change in federal tax bill as a function of gross income level. Note that there are + and - signs in front of each number, which correspond to whether it is a tax increase or a tax cut.

 

 

That's what I thought. Thanks for clarifying. :thumb:

[H]

That is how I took it because of the +/- in front of the dollar figure. If that is what it means then Obama is wanting the top bracket to pay over 50% of their money in taxes. That is absolutely insane.

 

Insane? maybe. But not without precedent. See my post above. The top federal tax bracket was over 80% from WWII to 1964 and greater than 60% until 1981. :eek: