http://online.wsj.com/article/SB122488938501868507.html
Sen. Obama is proposing to raise taxes more than any recent candidate, while Sen. McCain wants to cut them substantially. Most of the campaign debate has been over whose taxes would be raised, and whose cut.
Here are the facts:
Mr. Obama would roll back the 2001 and 2003 tax cuts for taxpayers in the top two brackets, raising the top two marginal rates of income tax to 36% and 39.6% from 33% and 35%. The 33% rate begins to hit this year at incomes of $164,550 for an individual and $200,300 for joint filers.
The Democrat would also reinstate the phaseout of the personal exemptions and itemized deductions for married couples making more than $250,000 a year. Those phaseouts would raise the top marginal tax rate for millions of taxpayers by another 1.5 percentage points.
Capital gains and dividend taxes would increase to 20% from 15% for those making more than $250,000, although capital-gains taxes on investments in "start-ups" would be eliminated.
The Election Choice: Further Reading
Health Care – The candidates differ on the merits of tying insurance to a job.
Mr. Obama's most dramatic departure from current tax policy is his promise to lift the cap on income on which the Social Security payroll tax is applied. Currently, the employer and employee each pay 6.2% up to $102,000, a level that is raised for inflation each year. The Obama campaign says he'd raise the payroll tax rate on incomes above $250,000 by as much as two to four percentage points -- though it's unclear if that higher rate would apply to the employee, the employer, or both...
Taken together, these add up to about a 10-percentage-point hike in marginal tax rates for those making more than $250,000 a year, including millions of small businesses that pay taxes at individual rates. ...
Meanwhile, House Ways and Means Chairman Charlie Rangel has proposed an additional 4% "surtax" on incomes above $200,000. This would further increase the top marginal federal income tax rate to close to 50% -- or slightly above that, depending on the rate of the new Social Security tax -- when combined with Mr. Obama's hikes.
Mr. Obama is also famously promising that 95% of all Americans will get a tax cut. However, he would not reduce tax rates. His tax cuts come in the form of tax credits, most of which are also "refundable." In tax jargon, "refundable" means that you get the credit even if you owe no income taxes at all -- which means the government cuts you a check. These credits include:
- a credit of $500 to offset the payroll tax on the first $8,100 in earnings;
- a 10% mortgage-interest credit for those who don't itemize their deductions and so don't currently benefit from the mortgage-interest deduction;
- an expansion of the earned-income tax credit that would raise the income eligibility, reduce the EITC "marriage penalty," and increase payouts for families with three or more children;
- an increase of the college tuition tax credit to $4,000, from $1,800;
- a 50% "savers" credit of up to $500.
- The child-care credit would be made fully refundable and the credit increased to 50% of child-care costs, from 20%-35% now.
According to the Tax Policy Center, Mr. Obama's tax credits would increase the share of Americans who pay no income tax to 48% from an estimated 38% this year.
On corporate taxes, the Obama campaign has proposed to eliminate "loopholes" for oil and gas companies and rewrite the rules for how multinational corporations are taxed. In particular, he has proposed to treat foreign-source income the same as income earned domestically -- which means subjecting all income earned by American companies around the world to the 35% U.S. corporate rate, which is the world's second-highest. He is also promising a "windfall profits" tax on oil companies.
Swell.
In other words, if you are a homeowner with two children or less, or you are single, or you have children but you are not sending them to college, then your "middle class tax cut" is squat.
Who benefits the most under Obama's tax plan? Families on welfare with three or more kids, who rent.
I know, I know, I'm just as surprised as you are.
I have also read that the net effect will be to increase the number of people who don't pay taxes from 38% to 48% - and that 48% will be getting checks back from the government for taxes they never paid. This will solidify a Democrat majority for years to come.
Obama: More free stuff for losers! (And you thought my avatar was hyperbole?)
What a 'fair' society Hussein wants to create.
I mean, just as long as you don't believe in an honest hard day's work -- otherwise you're basically screwed.
And notice that American business will be hit hard by Obama's new taxes; which means American companies who are still profitable on income earned abroad (e.g. IBM) will now pay the second highest income tax rate in the world.
Hello second and third world economy!
