Comparison of Taxes: McCain vs. Obama

I did my daily check of the articles summarized on the home page at RealClearPolitics.com and found an article in the Wall Street Journal about the differences in the proposed tax plans of Barack Obama and John McCain. It is interesting to see how the two candidates "spin" their statements on taxes, especially Obama. I quote three portions:

Mr. Obama claims no "working families" earning less than $250,000 would pay more in taxes, but that's because he defines income more broadly than the taxable income line on the IRS form. If you're an individual with taxable income of $164,550, you will pay more taxes.

Now, I am fiscally nowhere near the $160K or $250K tax bracket, and it seems that right now I may benefit more from Obama's plan. More highlights:

As for Mr. McCain, the central plank of his personal income-tax proposals is to make permanent almost all of the 2001 and 2003 tax cuts. This would leave the top marginal rate at 35%. The one exception is the death or estate tax, which expires for one year in 2010. Mr. McCain wants a 15% death tax on estates larger than $5 million. Mr. Obama wants a 45% rate on estates larger than $3.5 million.

Mr. McCain would also increase the dependent exemption by two-thirds -- to $6,000 per dependent from $3,500.

Summary:

In sum, Mr. Obama is proposing to use the tax code to substantially redistribute income -- raising tax rates on a minority of taxpayers to finance tax credits and direct income supplements to millions of others. How much revenue his higher rates would raise depends on how much less those high-earners would work, or how much they would change their practices to shelter their income from those higher rates.

By contrast, Mr. McCain is proposing some kind of tax reduction for most Americans who pay taxes. He says he would finance those cuts by reducing the rate of growth in federal spending.

The one thing I like about both is that they're both going after the oil profits. Obama's plan is much less friendly to small businesses and for well-to-do families hoping to pass on their estates to heirs. Obama has many little perks for people like me, students, and lower-income families, thus his comments that 95% of all Americans would get a tax break or cut under his plan. In the same breath many of those same people would also be paying more taxes elsewhere. Obama also wants the wealthier portion of America to be the primary financiers of the Social Security program, using it to "redistribute wealth." McCain's is aimed more towards reducing government spending and promoting growth in the economy by taxing businesses less.

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