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Comparison of Obama's tax plan to McCain's.
June 13, 2008 11:22 AM

The non-partisan Tax Policy Institute has come out with a projection of each candidate's tax plans and how they effect income:

The two candidates' plans would have sharply different distributional effects. Senator McCain's tax cuts would primarily benefit those with very high incomes, almost all of whom would receive large tax cuts that would, on average, raise their after-tax incomes by more than twice the average for all households. Many fewer households at the bottom of the income distribution would get tax cuts and those whose taxes fall would, on average, see their after-tax income rise much less. In marked contrast, Senator Obama offers much larger tax breaks to low- and middle-income taxpayers and would increase taxes on high-income taxpayers. The largest tax cuts, as a share of income, would go to those at the bottom of the income distribution, while taxpayers with the highest income would see their taxes rise.

Indeed, very different plans. But there is one thing in common between them both:

Although both candidates have at times stressed fiscal responsibility, their specific non-health tax proposals would reduce tax revenues by $3.7 trillion (McCain) and $2.7 trillion (Obama) over the next 10 years, or approximately 10 and 7 percent of the revenues scheduled for collection under current law, respectively.

The report goes on:

Furthermore, as in the case of President Bush's tax cuts, the true cost of McCain's policies may be masked by phase-ins and sunsets (scheduled expiration dates) that reduce the estimated revenue costs. If his policies were fully phased in and permanent, the ten-year cost would rise to $4.1 trillion, or about 11 percent of total revenues.

But how do their plans compare against the 2001 and 2003 tax cuts which are to be extended and the AMT patch made permanent (both candidates favor this comparison)?

Senator Obama's proposals would raise $700 billion, an increase of 2 percent, and Senator McCain's proposals lose $600 billion, a decrease of roughly 2 percent. Senator McCain has stressed that deficits should be closed by spending cuts, but policies he identifies, such as limiting earmarks, would offset only part of the revenue losses attributable to his tax plan. As noted, both candidates may be overoptimistic in their revenue targets for closing tax loopholes-Obama probably more than McCain.

So essentially, Obama's plan puts tax rates for the rich back to where they were in the 90's and McCain's policy continues Bush's generosity to the rich. Yet both do not adequately address the massive deficits this country faces.

The full report is here.

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It is about time to get back some fiscal responsibility in this country. What is McCain thinking? Do people in the top 0.1% of earners really need another tax cut? Trickle down economics didn't work and never will work. The rich have every advantage in our society and I think it is perfectly reasonable to have them pay their fair share in taxes.

- Posted by DanR - June 13, 2008 2:23 PM


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