McCain or Obama? Who’ll be better for your wallet?
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Adam Conner 7 I want to keep this factual. This is not an article on who should be the next President, or as these campaigns usually go, who shouldn’t be President. This is a simple presentation of facts as they stand today. Bottom line - who’d be better for your bottom line next year...Obama or McCain?
The Tax Policy Center has done some serious analysis of the current tax policies of our two candidates. You can read about it here , and download the 37-page report here . Of course, as these are preliminary figures they’re likely to change a little, but not a lot. Sam Pizzigati of the blog Too Much analysed the figures . And the results, while not exactly surprising, do provide food for thought.
As you’d expect, Obama’s tax plan will be better for lower-income families. And McCain’s tax plan favors the wealthy. There is a simple graph below that outlines the figures.
The analysis
First, Obama. Under his proposed tax plan, the super-rich (around 140,000 households or the top 0.1% of the US population) have a lot to worry about if he becomes President. In fact, in 2009 the top 0.1% will pay roughly $701,885 MORE in taxes than they do currently. If you’re making over $2.9 million a year, your taxes will increase to 39.2%.
The middle-income earners (the middle 20% of the US, earning between $37,595 and $66,354) do a lot better under Obama, getting a boost of roughly $1042, or around 2.4%.
And the low-income families (the poorest 20%, earning below $18,981) get the biggest boost of all. They’ll be around $567 better off, an increase of 5.5%.
Now McCain. Under his proposal, the super-rich get a little richer. That same 140,000 households get a 4.4% increase in after-tax income, equating to around $269,364.
The middle-income earners get a boost with McCain too, although much smaller. They’ll receive a 0.7% increase, or $584.
And the low-income families, well, McCain does offer them some relief. But not much. Around a 0.2% increase in after-tax income, or a whopping $21.
What does this mean?
Politically, McCain is doing what Bush and Reagan did before him. It’s the trickle-down effect. You give the super-rich big tax cuts, they in turn use those cuts to boost business and create jobs for the middle and lower classes.
Obama is more in another Republican’s camp – namely, Eisenhower. In 1959, the wealthy paid over 45% of their income in Federal taxes. And around 77% on estate wealth.
Personally, leaving all other political agendas aside, I’d have to vote for Obama under this plan. I would receive greater tax benefits from him than under McCain. And if you’re in a low income bracket, I’m sure you’d prefer $567 in your pocket rather than the $21 McCain is offering.
Of course, this is subject to change but the point is clear. The more money you have, the better off you’ll be under McCain. If you’re a super-rich Wisebread reader, the difference between McCain (+$269,364) and Obama (-$701,885) works out to $971,249. That’s almost $1 million dollars! With so much at stake for you in 2009, I can see why you’d vote for McCain. But is McCain trying to buy the rich vote and maintain good relations with corporate interests? That’s a story for another time.
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Well, good article. I think there are other financial issues beyond just income taxes the two candidates differ in. For example, Obama wants to eliminate the social security tax income cap, so everyone will have to pay the full 12%. Additionally, Obama wants to extend unemployment benefits I believe. I really don't know how it will turn out in the end, but I am guessing Obama will probably win since the Republicans are so unpopular right now.
I'm a moderate who's voted for republicans and democrats in the past, Goldwater type I suppose.
I make just over $60,000 and was a little surprised how bad McCain's plan would be for me as this seems like an income firmly in the middle class. I heard him speak once in Ohio and thought from what he said he would be more supportive of the middle income folks like me, but the numbers here don't lie (actually, I checked on both their websites and this is a fairly good analysis of their systems - though simplified, it's accurate).
I guess this means my pocketbook is voting for Obama. That, and all the nuts talking about him not being Christian which is just crap.
Jeff, I'd hold off on that vote.
What Obama doesn't mention is that his proposed tax on the "super rich" includes raising the capital gains tax, which is what the federal government takes from any profits we make from the sale of stocks.
ANYONE -regardless of income level- who has a 401(k), an IRA, or any other retirement vehicle is likely invested in stocks or mutual funds that invest in stocks. Obama's proposal would raise the tax on your retirement money from 15% to 33%. This applies to low income, middle income, or high income families. Again, this applies to us all.
This is not a partisan statement, merely the facts. Obama wants to implement many new government programs, and getting more tax revenue is the logical way to do it.
My wife and I combined earn less than you, so our pocketbooks wanted to know the whole story. Hope this helps.
John Kopmeier
As Xin Lu pointed out, there are many, many factors to consider regarding the candidates and finance. My only hope is that people won't be "one-issue" voters, taking into account the bottom-dollar info from one or two blog posts.
I have been following the tax issue quite closely, and am very familiar with the 37-page report from the "preliminary" analysis. I hope people understand a few things before they cast their vote in stone:
1) The report is based on information gathered in a very early place in the election. As we have seen in the past, candidates "revise" their position continuosly, and often up until the day they are elected (and even afterwards in some instances.)
2) All tax planning is still subject to the joyous workings of our legislative system. We may even see some judiciary action on items that are especially provocative.
With this being said, I personally could fare better under either plan. The numbers put out by both you and Too Much didn't consider a few other things:
A few other things that caught my eye were:
We also need to think of America as a whole. While I'm all for getting more cash in my pocket, at what cost? The report clearly states "Overall, the economic effect of the Obama proposals will depend on how the resulting deficits are closed. If the deficits result in higher tax rates in the future, the economy will be harmed. If they are closed by spending cuts, the economic costs will be lower, but the long-term gain in progressivity may also be diminished depending on which programs are cut."
This election will be serious business, as usual. I hope everyone takes the time to really read up on the tax issues (as well as other issues) before deciding thier vote.
Thanks for bringing up this very important matter, Paul!
"McCain, in particular is offering 'to replace the current exclusion from income tax for health insurance provided by an employer with a refundable tax credit of $2,500 for singles and $5,000 for family coverage. Unlike the current exclusion, the credit would be available for privately purchased insurance as well as insurance provided by an employer.' That's an extra $5,000 [emphasis added] that your formula didn't address."
So, McCain's plan gives employers an excuse to transfer the cost of health insurance from the employer to the employee, because a husband and wife can receive a $5,000 tax credit? Great!
The average American spends $4,700 a year on health services and pharmaceuticals. Twelve percent of that is siphoned off by the insurance bureaucrats, and 20% is waste because of inefficiencies in treating the uninsured and underinsurred. Is it an extra $5000 income to the taxpayer?
Sounds more like a transfer of wealth from the average working taxpayer to the corporate employers. The way our healthcare system is now is essentially a huge tax levied on people who have insurance or pay their own health care costs. Our healthcare system is broken. We're 24th in quality of healthcare, behind Costa Rica, and pay twice (14%+ of our GDP) what other more civilized first-world countries pay.
It's time for universal, comprehensive, single-payer healthcare for all Americans, and a law putting the private health insurance industry out of business. Pay for it with a tax shared by employers and employees equally, probably around 12% of the GDP. The savings in California alone would be around 8 Billion dollars annually.
I can see how the numbers look like their in favor of Obama - but I do have a different question - which plan will better america? Do we take from the rich and give to the poor? Or do we give the poor the opportunity to make money? Yes, tax wise McCain's plan will only provide me with $21 - but if I can work more because the rich are able to pay more, what's that worth? I'm currently looking for employment and it is difficult because businesses don't have the money for payroll. If we tax those big businesses, is that going to make them provide more jobs, or fewer?
I don't want to depend on the government giving me money, I want to depend on the government to stop taking my money and allow me to grow. With our deficit I can tell that I'm better at managing my money than the government.
...although corporate loopholes need to be closed, too.
Another important thing to remember is that money was YOURS to begin with! Those "taxes" come from your "income". This has nothing to do with "welfare" or a "hand up".
...will the defecit continue to grow under McCain, who seems to be on a very similar path to Bush at this point? Also, McCain has credit card debt, Obama has none. Another indication of things to come? Who knows. And will the rich use that money to provide more jobs? In an ideal world, yes. But we've seen big business in the past make record profits and lay off hundreds of workers in the same year. When the priority is to the stock holders' best interests, it changes the equation significantly.
@Paul
The deficit is going to grow under both candidates, thinking any other way is just either your personal bias towards your candidate, or naivety.
Also, your utilization of the number of jobs as a litmus test is tripe. Top it off with your credit card comment, and you have bonafide nonsense. Congratulations!
I am surprised at how bereft this article is of sound economic theory given the subject matter of the blog. Your own bias is seething through your "interpretation" of the numbers, and the rhetoric you are pushing forth.
You use "strawman" techniques to characterize the plan as a "rich get richer" scheme, but ultimately you misrepresent the "spirit" of each plan. I don't even need to mention that the top 1% pay 40% of the income tax in America, do I? (And I certainly am not in that bracket) Do I need to also mention that over 50% of working Americans don't pay any income tax? The representation of the tax plan as a war on the poor is patently absurd...because the poor don't pay income tax as it is.
Your insistence on comparing the top .1% to much larger demographic segments is equally demonstrative of your bias. That is like comparing Ferraris and Toyotas. Just poor form overall.
This is just the beginning, one could go on for days pointing out the inaccuracies in your post, or give more background. Your face value (shallow) analysis leaves a lot to be desired, and is honestly a black mark for this site, which is typically exemplary. You are letting your political bias dictate your copy, regardless of whether it is intentional or not. It is obvious you don't have the capability to remove yourself from political bias, so I would suggest staying far away from the topic.
For the record, I dislike McCain a great deal. I am a Libertarian, and have no affiliation with either party. I just hate the purveyance of economic and fiscal ignorance.
I've never received work from a "poor" person.
I believe it was Benjamin Franklin who said (not word for word)that in order to get out of poverty, you need to make being poor so unbearable that you'll work harder to get out of that situation. It reminds me of what our grandparents did for our parents (I'm 30). They grew up in the Depression era, going without and scraping by. When our grandparents were starting their families (our parents), they wanted to make sure that their children wouldn't suffer like they did. It became a double-edged sword: on one hand, you have a generation of people who didn't want for anything but on the other hand, a generation of people who understand entitlement rather than hard work, generally speaking.
I don't know who I'll be voting for yet, but I do know that there is a reason why people are "poor". Throwing money at them will not solve their poverty issues.
@Paul
Have you considered an article covering the FairTax Plan? If not, you should!!!
I think you'll be pleasantly surprised.
A mature political discussion... even though I'm usually in the minority with my views. Regardless of Paul's personal opinions or how they may or may not have come out in his post, I give everyone reading this blog enough credit to research the materials and put together a voting plan that works for them. While I can see how some may be put off by the article, I think it will generate some good conversation, and hopefully, a newfound passion for discovering political truth.
that Warren Buffett, a richer and wiser man than most, has deeply criticized tax cuts for the rich. This, from a Guardian article in 2007:
"There wasn't anyone in the office, from the receptionist up, who paid as low a tax rate (as I) and I have no tax planning; I don't have an accountant or use tax shelters. I just follow what the US Congress tells me to do."- Warren Buffett
@Patrick
There are too many inherent issues with FairTax (National Retail Sales Tax). The theory is sound, but the effects are mostly conjecture.
Flat Tax is a far more pragmatic approach. The IRS won't be abolished in our lifetime. That is for sure.
@Paul
You are taking his comments out of context. Warren Buffet is often misquoted regarding his stance on taxation (as is Milton Friedman).
But now that you mention it, I think it goes without saying that I would much rather have Warren Buffet, who is an astute businessman, with funds to invest, rather than someone else. As someone above already mentioned, it is typically a safe bet to say that factors contributing to an individuals poor financial state are rarely external. We need to stop living in a victimization society, and start taking some responsibility for our own situations. Stop the blame game!
@OP
Just as I thought the economic stimulus payments were absurd, so is your notion that $500 is really going to help. It is too little, too late, and worse yet, appropriated in a poor fashion.
Here is a great video that outlines some of Obamas wonderful tax plans:
http://www.wrevenue.com/2008/05/18/obama-clueless-on-taxation-and-entrep...
If that is true it could harm more than you realize.
Which is better for you: a bigger tax return or a job?
or if you're job-secure, which is better: a bigger tax return or living in a community with low unemployment?
a good job is way better than a bigger tax return. Can you guarantee that larger tax cuts for the rich will result in more jobs? If so, sure.
To all the people who continue to talk about this trickle down theory:
We have been trying to do this for about 8 years now and all it has done is bankrupt our country. The rich don't spend money, they save and invest it in stock. They don't create jobs, unless you count crappy low paying jobs without benefits.
also, to the people who are claiming that most poor people are poor because they don't work hard enough, it's called a cyclical poverty. some people can't pull themselves up by their bootstraps, because they weren't lucky enough to be born with said bootstraps. we need to empower people and restructure the system to allow people to get out of poverty, not continue to punish them for being born into poor families.
It's really very hard to prove or disprove trickle-down theory. I know that on a personal level, I give more, spend more, and employ more services when I am more financially stable. And while my savings tends to stay constant, I see trickle down work well in the lives of "common" people around me every day. You can't say that some companies don't employ the same practices. The ones I've worked for, at least, have had more employee events, done more for charity, and generally provided more employment opportunities during their financial upswings. Seems that would be the way most common sense people would do it. Maybe when we don't see it working, it is due more to a sense of insecurity of the future than anything else.
'To all the people who' is such an absurd post that I am unsure where to begin. First, "trickle down economics" i.e. tax cuts for higher end tax brackets has no effect on bankrupting the nation. Excessive spending bankrupted our nation. You don't overdraft your checking account by earning less money, you do so by spending more than you make. Secondly, in addition to the rich, the higher tax brackets include many small business owners who happen to create a vast amount of jobs.
'Cyclical poverty' is just another way of saying 'failure perpetuate through poor decision making and laziness'. Everyone has the chance to make the decisions necessary to better themselves fiscally. They just CHOOSE to act in ways that prohibit success. The fundamental flaw in your statements lies in a reliance on the system as a tool to lift one's self from poverty when all that is needed is one's self.
You are an idiot and enablers like you are the primary problem with our nation. You drag down this nation like a pair of cement boots.
This is not surprising... what happens to the rest of the population (which is not included in your graph) between the "Middle" and "Rich"? That's nearly 60% of the population the graph does not account for... It's not really fair to compare the tax plans without including the majority of the population.
Well, personally I don't vote because I'm not an American citizen, but I agree that the last 8 years it wasn't the Bush tax cuts that bankrupted America. Obviously a lot of money is being spent on the war, and internally people are just spending a lot of money on their own. I do think that tax cuts are good for the economy, and I don't agree with Obama that we need to help people get out of foreclosure and give them longer unemployment benefits. That does encourage laziness and speculative behavior. I feel that he wants to penalize people who worked pretty hard for their money, and I wrote a post about it here because I think he will win regardless: http://baglady.dreamhosters.com/2008/06/06/more-tax-hikes-ahead/
If you look at the report, Obama will be raising taxes on all Americans making over $200,000 a year. Doesn't sound like the super rich to me. Indeed this will include small business owners and entrepreneurs who are the life blood to this economy.
By raising taxes, the government will be taking more money out of our checks before we ever get to see it. That is money we will never see again. Is this really acceptable to the hard working American?
Again this does not take into account the health care reform of each candidate. In the case of so called universal health care all americans will be paying for this regardless of income levels. Higher taxes for all.
Remember that these numbers we're looking at are simply averages of how you current tax payments will increase or decrease under two plans. It says nothing about which tax rates people are already paying or how those will change.
Bush cut taxes for everybody, but he made the system more progressive; his cuts benefitted the second lowest quintile of earners most and the middle class second. The rich also benefitted, but their taxes were cut 11% whereas a person making $60,000 a year got roughly a 24% cut (this includes ALL tax changes including estate tax). So now Obama or McCain is going to be adjusting those adjustments; it's not like they're starting with a blank slate here.
The rich already pay vastly more taxes than the poor. So of course when there are tax cuts the rich "benefit more." They get more money back because they put more in to begin with. This is fair, rational, and logical. If a rich person buys a $10,000 rug and a poor person buys a $100 rug and they both get a 10% discount then of course the rich person saves more - but how stupid does it sound for the poor person to complain about that?
Raising tax rates on the rich and slashing them for the poor disincents both groups from being productive, working hard, taking risks, (i.e. start businesses) and trying to make more money. When rich people lose moral about the economy they stop spending, stop building, stop taking business risks, and therefore the government loses tax revenue and the economy shrinks. When poor people do the same, the government's expenses (welfare, tax credits, etc) shoot up. Everybody loses.
Tax the Rich...HA!
Dad made well more than $50,000 a year from his New Car Dealership when I was a child in the early 60's.
Probably equivalent today to Half a Million. Did he take home more than $50,000...NO.
Why? Because the marginal Tax Bracket then was 50%..WITHOUT Social Security. 50% of his $50,000...$25,000....went to Federal Income Tax.
And if he had taken what he really made out..more than $150,000 he would have been in a 70% tax bracket..the rate then was 70% on ANYTHING over $103,000.
Why work when you're going to lose so much of it to the Government??? Businessmen worked ways around it..and I am NOT ashamed to say my father or any of his kids haven't taken advantage of any loophole we could find.
Thus came about the Three Martini Lunch, Company Car(s), Stock Options, and Week Long Conventions in Vegas....all Non-Cash (or Taxed) ways of paying someone.
And don't tell me Public Officials don't pig at that trough as well.
Here Police Officers get Free or Discounted rent on apartments, Dominos Pizza show your badge (Firemen as well) any Pizza $3 picked up. Usually 50% off at any restaurant. The patrol car and the gas to go with it...oh! did I forget they can use it on their Off Duty Jobs. Florida says they must reimburse the department for $3 per hour for use of the car. And the biggest perk on HUDs website is the Policeman, Fireman, Teacher Next Door program where if you take a Foreclosed house in a not too desireable neighborhood and live in it for two years you get it at HALF PRICE!!
And what does all this have to do with the candidates Tax Positions?? It shows that they are meaningless as ways are ALWAYS found around whatever law is put into place...and its not just "the Rich" who take advantage of it.
~ Roland
FrugalZen,
I'm not sure where the policemen and teachers of which you speak are, that get to buy run-down homes in bad neighborhoods for half price and live in them for only two years.
I've looked into this program myself. The homes aren't just waiting there for you to pick them. Most of them go to Katrina survivors. You have to check the site everyday. And the commitment is 3 years, not 2.
It's not that great of a deal. I know two people who bought one of these homes. One has about $60,000 of repairs to put into it. The other did it because she has family members who can do the fix-up, reconstruction work for free. For most teachers and policemen, the trouble isn't worth it.
"Raising tax rates on the rich and slashing them for the poor disincents both groups from being productive, working hard, taking risks, (i.e. start businesses) and trying to make more money"
From 1930-1980 the tax rate for high earners was much higher than it is now. During this time America's economic greatness was born. Right now hedge fund managers pay 15% tax on their income; yeah they take risks- on subprime mortgages.
Ummm, have you ever heard of World War II? Our boom had nothing to do with taxation.
Let's also not forget that the subprime mortgage boom rests at least partial blame on liberal attempts to make housing more "accessible" to those that otherwise shouldn't be given mortgages.
There were screams in 2000+ that housing was just too expensive for most individuals, which caused certain fiscal policies to be implemented that created the subprime culture that has wrecked the mortgage industry.
America loves to legislate...and 99% of the time, we legislate ourselves into a hole.
I am so sick of this crap! When did America become a socialist state? This article focuses on the bottom 20 percent that is not getting a bigger tax break under McCain, but do the math and you will lean that the bottom 20 percent doesn't pay the taxes. The top 1 percent of earners pays 30% of the tax burden and it trickles down from there. I’m so Pi$$ed off that people who didn’t pay into the system got a stimulus package. I'm not a big Mc Cain fan, but Obama's plan to reward the unmotivated is just what we need to launch us into an endless recession. Welcome back Carter. When are we going to focus on getting the bottom 20 percent up to the top .01 percent instead of dragging our top down?
I came here expecting an honest analysis of the differences. I was highly disappointed to see a thinly disguised pimping for Obama. I read political blogs for that.
Your credibility took a serious hit with me.
Electing your chosen candidate is not worth compromising your integrity on this blog. And this post is flirting with that.
Make the same type of post about McCain and I will feel the exact same way.
Sign me,
Disgusted Tonight
There's a typo in the toomuchonline.org article that was repeated here. Under Obama's plan, the middle quintile would get a boost of $1042, NOT $1402. I've already contacted toomuchonline.org about this.
This article is a fair snapshot of the candidates stated policies, but as other comments have pointed out, our nation is bankrupt. We are running record deficits, and most people ignore the fact that the money is borrowed, not just printed up on demand. We have to pay ever-increasing INTEREST on this deficit.
To make matters worse, much of this money is borrowed from the central banks of other nations, who have their own agendas.
The Government Accountability Office (don't laugh, I'm not making this up) has an excellent report called:
The Nation by the Numbers:
A Citizen’s Guide
A Summary of the FY 2007 Financial Report of the U.S. Government
Financial Condition
http://www.gao.gov/financial/fy2007/guide.pdf
Look at the green and white areas on the chart on page 3, titled "Current Trends Are Not Sustainable"
The Democrats have been accused of having a Tax and Spend philosophy, and IMHO that is much more rational than the current Republican Borrow and Spend philosophy.
While nice little wars are always fun, we have to recognize that they are a luxury that we CAN NOT AFFORD. We are going to pay for our invasion of Iraq. Our children will pay, their children will pay, and their grandchildren will pay.
I fully support Barack Obama for President.
The bias of this post along with the shortsightedness of some of the folks leaving comments is shocking! Personally, I don't see any difference between the Republican and Democrat parties anymore. IMO we've "progressed" to the point of having a one-party system. Now, I'm not a McCain supporter, but I do have to say that electing Obama President would put the economy under serious pressure.
The key of this whole discussion is that all of you are assuming that you will have a job. In order to have a job, corporations (gasp--yes, those evil entities that employ most of the people in this country) need to have the money to pay you. They get that money by generating a profit and through folks buying their stocks. Guess what Obama's plan doesn't help in either case.
If you start taking more money from the corporations, you are going to end up with an out-of-control unemployment rate. Just look at what has happened to the economy as a result of raising the minimum wage. What a huge mistake that was. That does nothing to encourage people to better themselves by finding a higher paying job. Instead it encourages complacency and small business cutbacks. I'm heavily involved with a small business on the side and have seen the unfortunate results of this policy.
We don't need more unemployment benefits--we need jobs. Again, that goes back to corporations having the money to hire. We don't need increased capital gains taxes because--we need to encourage saving and investing. We don't need the government to shoulder the colossal burden of nationalized health care--we need people to take care of themselves.
There is so much more to this election than just the personal tax rate. If you want Socialism, move to France. In fact, many Socialist countries are moving more towards Capitalism because they've finally realized that Socialism doesn't work. Did you know that Socialism was tried in this country when it was originally founded? It failed miserably. I wish people would see the big picture.
Long live Capitalism!
You do your readers a disservice by not mentioning that the above is only a small, small portion of the impact the candidates will have on our financial lives, and when you look at the bigger picture it looks vastly different than you portray it to be. Obama will do NOTHING to help energy prices, in fact his plans will make things far worse, his overall economic policy will lose us jobs as he taxes businesses into the stone ages. He's a socialist, pure and simple.
"You cannot bring about prosperity by discouraging thrift.
You cannot help small men by tearing down big men.
You cannot strengthen the weak by weakening the strong.
You cannot lift the wage-earner by pulling down the wage-payer.
You cannot help the poor man by destroying the rich.
You cannot keep out of trouble by spending more than your income.
You cannot further the brotherhood of man by inciting class hatred.
You cannot establish security on borrowed money.
You cannot build character and courage by taking away men's initiative and independence.
You cannot help men permanently by doing for them what they could
and should do for themselves."
Please, please, rent the movie "Idiocracy". This is where we are headed if we don't make changes NOW!
As I said before, throwing money at problems is not the answer. It hasn't worked for education, the "war" on drugs, Medicare/Medicaid, Social Security, etc.
It's time we start voting for candidates who aren't "career politicians". We pay for their healthcare and pension plans while some cannot afford to go to the emergency room!
It's time to make the government work for the people again, not for special interests!
But what do I know, I'm just one person...
The Tax Policy Center is funded by two liberal think tanks in Washington D.C. the Urban Institute and Brookings Institution. You should use more sources for an unbiased article.
Obama's economic strategy is based on spending. His current tax plan will not be able to support his plans to spend the economy out of the recession.
Therefore, he will likley increase taxes on everyone, while spending like a mad man. It's that what most politicians do? Bush cut taxes, but increased the debt.
Obama's plans will not work because the country is broke. Their is no more money to tax, print or borrow for Obama to spend. It's doesn't matter what he says, he does not have a good economic plan. Tax and spend is not a good economic recovery strategy.
Is that both the McCain and Obama plans offer certain cuts that are relatively permanent, and some that will be increased or phased out altogether. The amount that will be "extra" in my pocket on my 2008 tax returns (or 2009 - if it takes that long to be approved) is not the same amount I will get in 2010, 2011, or beyond. Temporary relief of anything isn't really relief, IMHO.
Please remember folks, although you may not agree with the article it doesn't reflect the opinions of the other writers at Wisebread. I'd hate to see anyone stop reading their articles because of my piece.
No, you have a fellow writer that is also trying to push forth his agenda. The title of this site is Wise Bread | Personal Finance and Frugal Living...I didn't know that meant Wise Bread | Partisan Proselytizing.
Let's keep the blog on topic, or if you are shifting your focus, be honest about it so the readers can make a choice whether or not to continue their patronage to this site.
Unfortunately I have not been as up to date as I would like for this election period (and I was a little tired of the bickering between Obama and Hillary). This is really interesting. I didn't know that obama was giving tax breaks to the middle class.
(1) Who'll be better for you personally based on economic policy? Well, the poor and middle class benefit more from increased taxes because the services they receive (and yes, we do get services from our taxes despite some wacky thinking here that the money simply disappears) will be a greater relative to their proportion of income than the services received by the wealthy.
(2) The benefits will be most direct for the poor, but the wealthy benefit dramatically by having a more stable social system because they are better able to maintain their current position.
(3) The increases are not "socialism" as some here seem to think - they would increase tax levels from today, but relative to taxes paid under Clinton, taxes will still be substantially lower.
(4) McCain has committed to continuing to spend similarly to how Bush has spent - "big" government has become bigger than ever under, you guessed it, first Reagan, then Bush #43. If you want your taxes to make it back to you and your community in the form of services and benefits (health care, schools, streets, police, firefighters) then expanding the federal government as is the elected Republicans' plan and history (though clearly counter to the plan and hopes of most Republican VOTERS) is not going to help. Out biggest debt, our harshest cuts to schools and service programs, and our loss of moral authority internationally and stability domestically, have been under Republican presidents and congressional control.
*Honestly, why the attacks like sky is falling merely because Paul pointed out Obama is going to give more to the middle class in terms of services (who can afford health care now? It's the biggest growing cost for small businesses, taxes have been the fastest shrinking cost for over a decade but the proportional loss of government provided services has been much greater than the prior cost) and ask for more from the wealthy who have received dramatic increased services and government aid over the past 7 years?
Get real, you're not reading wisebreat because you've got a ton of money, you're a frugal person who's hoping to do better in a reasonable way - that reader may aspire to wealth and fear potentially higher taxes but this fear is irrational, the benefits from services for most readers here will outweigh the minimal cost of increased taxes.
Imagine how many more people would employed by small businesses if they didn't have to pay so dearly for health care under Obama's plan (or better yet, under an expanded medicare program making all providers negotiate bulk costs with the government rather than screwing businesses and individuals with higher costs and worse service?
Oy!
*Honestly, why the attacks like sky is falling merely because Paul pointed out Obama is going to give more to the middle class in terms of services (who can afford health care now? It's the biggest growing cost for small businesses, taxes have been the fastest shrinking cost for over a decade but the proportional loss of government provided services has been much greater than the prior cost) and ask for more from the wealthy who have received dramatic increased services and government aid over the past 7 years?
It's because his conjured statistics are fallacious at best. It is proffered as an impartial and objective analysis, when it is far from it. Not only does he impart his own brand of bias, his numbers and statistics are generated by partisan and ideologically based sources in the first place. That has no place here on wisebread. Paul knew firsthand what he was getting himself into when he prefaced his piece with a warning.
I commend him for bringing up the topic, but this isn't the place for it. I know that Paul was acting in good faith, I am not asserting otherwise, but I must admit, it was done in poor form, and all but the most myopic should have seen many of the readers would dislike the "analysis".
The fact is, most people don't get reciprocated services valued at the amount that they pay in taxes. Did you know that the average American taxpayer works until the 3rd week of April for Uncle Same? When put into perspective, many take a step and start seeing the wealth redistribution initiative for the sham it is.
Get real, you're not reading wisebreat because you've got a ton of money, you're a frugal person who's hoping to do better in a reasonable way - that reader may aspire to wealth and fear potentially higher taxes but this fear is irrational, the benefits from services for most readers here will outweigh the minimal cost of increased taxes.
Maybe there are readers of Wisebread who DO have a lot of money, and the reason they do is because of their conservative fiscal ideals.
I disagree with you that individuals receive benefits equal to what they pay in. The numbers just don't substantiate that claim. Ultimately that would be the goal, but it certainly isn't true. Why do you think "governmental efficiency" is considered an oxymoron?
My next few topics should interest everyone, they are not political in any way. Thanks for the comments. And if there's anything you'd like to see any of us, including me, cover on WB then please feel free to ask.
Paul, let me be clear, I commend you for taking a step out of the box and trying to put something like the tax plans into perspective. I really do.
The more I think about it, the more I am happy you put the post up, although I would have ventured to say a full disclosure of your political affiliations might have been in store.
You aren't the only one getting election fever. Forgive me if I am a bit brash, diplomacy isn't my strong suit.
However strong individuals push back, if you get the discussion going, you are doing something right. To be honest, neither candidate is going to be good for your wallet, and that is the truth.
I should have researched the Tax Policy Center more rigorously, and I took the numbers presented by Sam Pizzigati as a fair and unbalanced representation of the report, which was another mistake. I don't think the figures are conjured though, that gives the impression that they came out of thin air. If this was the case, wouldn't the Tax Policy Center and Too Much be at risk of a lawsuit from either candidate?
There are three kinds of lies: lies, damn lies, and statistics.
Mark Twain
This is probably a semantic argument, but statistics can be spun or "conjured" to say just about anything you want them to. Regardless of whether or not the statistic itself is accurate, even semantic differences can be made to completely change the perceived meaning of the statistics.
For example, let's say there was the following statistic:
25% of people want the war in Iraq to stay its current course
You could rewrite the "statistic" to say, 75% of people are against the current Iraq war
Your statistics are probably correct except for the mistake that was already pointed out, but they were used to paint a picture that push forth the agenda of the group manipulating the numbers.
So did they come out of thin air...yes and no. I think it depends on how you look at it.
You obviously don't understand how numbers can be massaged and manipulated to say whatever you want to say. Because they can, there is no grounds for a lawsuit.
You may be a smart guy. But stick to stuff you know. And be honest. I am still irked that you posted political mongering under the guise of personal finance.
Help for the 99.99% just seems so .... SIMPLE. Yep, no brainer.
We all had better care about the .01 -- under any plan, they put alot of money into our system. The moment we start "doing away" with any portion of our population by taxing them to death, we are in essence punishing them for their behaviour. This, in my opinion, is against the spirit of capitalism. But I think we all knew that already. :)
Paul, you haven't done your research. If you're going to write a post like this, you need to look at both sides of the spectrum and stop reading liberal blogs. "The rich get richer, and the poor get poorer" is a liberal democratic slogan to manipulate poor, uneducated people to vote for Democrats.
Barack Obama is NOT in support of making the 2001 Bush tax cuts permanent. The Bush tax cuts lowered the lowest tax bracket from 15% to 10%, a 33% decrease.
If Obama does not make that permanent, he will be effectively agreeing to increase the middle class tax bracket by 50%
Obama will increase capital gains taxes from 15% to 28%, almost a 100% increase. There are millions of lower-middle class Americans with stock and real property investments that will be effected by this. The rhetoric about the 50 hedge fund managers who made billions of dollars in the past few years is just a dumb argument. They represent .00001% of the population with stock investments.
I also agree with the other commenters on here that when you have a tax plan that only penalizes the rich, you are penalizing the very people that create jobs for poor people. Why would you want to hurt businesses and corporations that ACTUALLY add value to this country. The government doesn't produce any good or service. They just take money. Obama wants more government and more bureaucracy so that he can have more power and more control over our lives. I definitely won't be voting for him.
I'm confused. The "rich" already pay a huge share of the taxes- certainly more than their share. See this link if you don't believe it... http://www.taxfoundation.org/news/show/250.html
Real quick-
• Top 1% makes 21% of Total AGI but pay 39% of all taxes
• Top 5% makes 36% of Total AGI but pay 60% of all taxes
• Bottom 50% makes 13% of Total AGI but pay only 3% of all taxes (Wow! That means the top 50% paid 97%!)
Also,
• Table 6 shows the shares of AGI for the various income levels. It shows the top 1% consistently paying a larger share of the tax burden- more in 2005 than in any Clinton year.
• Table 5 shows that from Clinton’s last full year in office through 2005 that the AGI share by income group has changed very little; in fact, it went up in Bush’s first couple of years for the lower 50%.
People should quit being selfish and voting which for whichever candidate is going to buy their vote- which is the essential point of this article. It's amazing how many have said- "Oh, I'll vote for Obama because he'll put more money in my pocket!". What's happened to America? Vote for the candidate who's going to uphold the constitution of our country. That's ALL that matters.
The best candidate is one who supports taking away power from the FED and dismantling the FED altogether. For our founding fathers did not want a central bank to begin with. It was one of the reasons the colonies wanted independence from British rule who supported the idea.
Too bad Ron Paul is out of the race.
Since your article has become so popular, maybe you can correct your $1400 number to $1040? Your source article has made the correction.
I really think it's worth linking and emphasizing two points that came in different comments:
a. it's important that the people providing jobs aren't given reason to employ fewer people
b. "corporation" is a tax-jargon word - it doesn't always mean *big* corporations. Even tiny companies are often wise to "incorporate" as a financial decision.
When doing an economic analysis, I would hope that readers would take smaller businesses into account. Having previously owned and operated a small "corporation" (less than 10 employees), I can tell you that not all corporate types are fat cats! Furthermore, in any small service business, employees are by far the single largest expense to a company. (Especially here in Canada where even the smallest of employers contribute a *lot* of taxes on behalf of our employees.) If we feel financial pain, we unfortunately *have* to take it out on our employees by reducing hiring, not raising wages or even letting staff go.
There has been interesting analysis done to indicate that raising minimum wage, for example, ends up hurting the working poor most of all. (As others have said, a tax break or a small raise can't quite compare to having vs. not having a job!) This is an idea that sounds like the rich justifying keeping the working guy down, and ff course, there's always bias, spin and agenda, but the ideas behind it have merit. I take it with a grain of salt, of course, but use ideas like that to remind myself that the picture is never quite as simple as it seems to be, and there are very few "no brainers" in economic decisions! :)
As a Canadian, I'm simply watching with interest and have no candidate to promote. I enjoyed this post, but agree that the data presented is only a small, small portion of the info on which to base an economic analysis of the candidates' respective positions.
"Why would we need the Federal Reserve? The whole point is to manipulate the money system in order to have a more stable economy. Tell me… is the economy stable? Was the economy stable in 1929 and the “Dirty 30’s”? The Federal Reserve has never done a good job."
We need a revolution!
"Who'll be better for your wallet"? or "Who'll be worse for public works projects, education budgets, grants for arts, federal research, college financial aid, social welfare, and other things that we need taxes for"? People act like they get nothing out of taxes.
bottom 20 + middle 20 + 0.1 equals 40.1 What about the other 59.9% of us? I doubt Obama will be as good for someone making 250K as someone making 39k. What a HORRIBLE and MISLEADING graph!
How does Bob Barr figure into that, since the LP wants to cut back taxes on both rich _and_ poor? Seems to me he'd be the best vote.
Several posts here assert that by letting the rich and businesses keep more of their money, they'll create jobs.
I'm not understanding, entirely, how that works. If I have a profitable business, and my taxes are cut, I get more money, but I might not necessarily hire anyone else.
Granted, I probably would create a job, to try and grow the business. BUT, if there's not enough demand for the service or product, I might lay this new hire off.
One problem we have these days is the decline in demand.
Maybe it's time to seriously look at Keynsian demand-side economics again. (Too bad Obama claims to be a Chicago school supporter.)
I trust neither with the economy. I trust neither with the war. I trust neither with social issues.
America doesn't really want change.
You forgot Poland.
If the "rich" are the top one percent (or less), then by virtue of receiving such LARGE sums of money, they inherently pay most of the taxes collected by the federal government.
You see, there is only so much money in the economy. Liberal bashers use it in so many arguments against so called left wing issues and causes.
But if there is only so much money, and such a tiny percent of the population collects most of it, then there are only crumbs left for the rest of us. This is obvious. It has much less to do with laziness, or choosing to be poor, and more to do with political brainwashing and manipulation of people with latent prejudicial tendencies.
We always hear the notion that "the rich provide all of us with our jobs" and "the rich pay the most taxes", and "the rich shouldn't be punished, because then they will put less in to the system" and other hollow claims to perpetuate trickle down economics theory.
Such ideas should be offensive to every strong willed, motivated, and hard working American. What nerve some people have!!!
This suggests that ALL of US are too STUPID and LAZY to be able to start our own new businesses and create a new revolution of jobs. And it completely misses the fact that many of us provide OUR OWN JOBS!
People will always have needs and wants. There will be important issues that face society. This is called "opportunity" and it's where progress and innovation develop and grow and evolve. It spawned the industrial revolution, and the information age. Rich people don't give us jobs, opportunity for innovation to fulfill the wants and needs of the people is what creates jobs.
Furthermore, rich people don't spend their money like average people, that's what makes them wealthy. Average people spend a large portion of their earnings every year, though some may save a decent chunk. Some rich people spend lavishly, but some don't, but what makes them wealthy is KEEPING their money. They invest it. To make the most money possible, not because they want to create jobs and give back to society.
They invest it aggressively in markets that are expected to grow. Or they find one of any number of creative investment strategies, which are more about stock value than productivity or real jobs.
Additionally, they gamble by hedging billions of dollars guessing which way the interest rates are going to go. No matter what people tell you, this does not create jobs.
Speculative investment banking is not what helps the middle class. This does not create real employment opportunities for Americans in need. Anyone who suggests it needs to investigate further and follow the money.
Investing in corporations like Walmart doesn't provide jobs either. Yet similar things are commonly products of trickle down economics. Low paying, part time jobs, with no benefits. Competitive prices at the expense of the employees, while the management and stockholders get the reward. Investment into Walmart (or any company, even a start-up venture) is not to provide jobs, it is to earn a return. It is to use existing wealth to make more money, aside from having a job like the working class folks do. Rich getting richer is not just liberal rhetoric, it's a known phenomenon also. To suggest otherwise is terribly naive.
Working class people do not have the funds to invest like this, and earn a living from dividends and interest. That lifestyle does little to benefit average Americans.
The model for this argument is based on an interesting paradigm.
It recognizes that wealth is sometimes inherited and sometimes earned.
But it also suggests that those who accumulate the wealth are more worthy to receive it than everyone else, and that they alone can make best use of that wealth and save us all with their benevolent spending, which theoretically injects money into the economy, which will then flow down to all of us while we can sing Kumbaya and hold hands and frolic in the glory of their kindness and the rewards which they so generously bestow upon us. (sounds rather liberal to me)
It explains this by claiming that if the rich don't have enough extra money, then they can't hire as many people, so there are less jobs. Because only the people who are CURRENTLY rich, are smart enough to create jobs for the rest of us who rely on them.
These are arguments from people who claim to be all about personal responsibility and making your own opportunities and creating your own destiny. It's strange how people who hold such noble ideals, turn around and claim dependence on corporations for jobs. It's not so different from the "hand up" type programs they so vehemently oppose. Just a different institution doling out the benefits.
But aside from the more obvious holes, there are even further problems with this flogic (flawed logic). First of all, large corporations with LOTS of money often manipulate markets and strongarm their industry into exclusive contracts, and use their power and might to eliminate competition. They also author legislation designed to hide behind a shared agenda (environment, civil rights) but are really designed to give themselves a unique advantage. This is beyond capitalism. It is eradication.
So if rich get taxed more, and hire less people, and large corporations become less mighty and powerful and offer less jobs to the public. This creates opportunity, in the way closer to that which Adam Smith described as a free market. There needs to be competition, and a system devoid of morals (capitalism) needs to be tempered with consideration of what is good and in the best interest of everyone, not just the few.
If the rich choose to stop putting money into the system, they will no longer be able to maintain their competitive edge through money and power, then new businesses emerge and take us into a new era. These periods of growth and evolution of the market are where the serious up-trends manifest.
When this opportunity exists, the finite amount of wealth begins to distribute more evenly, which actually would lead to less individual income tax per person overall, and less need for individual services like welfare and unemployment insurance (as opposed to roads and police). Each person would earn significantly less than the top 1% currently do, so they would pay less taxes by being in a lower tax bracket. The same amount of money in our economy but there wouldn't be such disparaging differences in wages and opportunities.
The bottom line is that some people earn $5 an hour, some earn $20, some earn $50. Some get benefits, some even a pension. Then others earn $500k a year plus bonuses and fringe benefits, plus traditional benefits of a standard compensation package. Some earn a million a year plus the other goodies.
Does the million dollar a year guy REALLY work 20 times harder than the $50 an hour guy? Is he 20 times smarter, or 20 times more worthy of having more wealth? Who is qualified to say that he deserves so much when some people have so little?
But is it really about taxes anyway?
Do you want to vote for people who said that there were too many regulations in the securities and equities market, and fought hard to eliminate them. Now, without any real oversight, the industry is collapsing before our eyes. And some of these same politicians are allowing the taxpayer to pick up the burden for the greed of a relatively small portion of the population.
Or maybe you wish to vote for people who destroyed the constitution, and created vast new powers for the Executive Branch of our federal government, perverting our founding fathers great design of checks and balances. The president of our nation can unilaterally declare war with a pre-emptive strikenow, without the UN, and pull out of treaties that took years to establish. This instantly eroded decades of work in trying to get the world community to agree to certain minimum standards of human decency and common ground.
How can we expect growing nations to abide by rules that our government refuses to recognize? Or better yet, how can we let these people REPRESENT US???
jealousy and greed are the motivation's here.
greed never being satiated.
jealousy of those that have more than you.
until you all realize this, you will be slaves to them.