Obama Vs. McCain: Tax Policies

And you don't have to take my word for it. Here's a report from the unbiased Tax Policy Center.

Of 377 stories listed recently on Google News about the bickering between the Obama and McCain campaigns over who said what about patriotism and taxes, none I could find actually listed tax policies of each campaign, so here's my roundup of their main policies, as well as a couple of nice Obama policy nuggets that haven't gotten enough press.

First the bad news. According to the Tax Policy Center, they both refuse to address the massive national debt. In fact, they will increase it by significant amounts. Obama's tax cuts are expected to amount to a smaller total sum than McCain's: $2.9 trillion versus $4.2 trillion.

So McCain can claim they will save you money. But that's not quite true. They can only save you money if you are in the top 20 percent - and especially the top 1 percent - of earners.For the other 80 percent of us, Obama will cut your taxes. McCain will too, but to a far smaller degree.

And McCain wants to make big permanent tax cuts for the wealthiest Americans.

It's only a matter of time before the GOP starts a big propaganda campaign against the "death tax." It'll be 2000 all over again as middle-class Americans lament the government stealing 45 percent of his hard-earned (and small) inheritance. However, the McCain "death tax" would not affect these average earners. According to the Tax Policy Center, it does not affect any inheritance of less than $5 million, and even above that mark would be at a 15-percent rate. Obama's limit is $3.5 million, with 45 percent of any inheritance above that mark going to Uncle Sam, according to the report. Seems more reasonable to me.

On a couple of items, Obama and McCain are on the same page. They both want to eliminate loopholes for oil and gas companies, according to the report. They also both want to make portions of the Bush tax cuts permanent, the Tax Policy Center concludes. McCain's only exception is the estate tax, which would be adjusted as noted above.

Obama would keep some of the provisions for children and families, getting rid of most other parts.

BARACK OBAMA

Here's other select Obama tax proposals, as listed on his campaign Web site:

- Eliminate income tax for seniors making less than $50,000 per year (so your grandparents don't have to waste time filling out forms to return a chunk of their social security back into the social security coffers). - Make permanent the Research and Development credit and renewable energy production tax credit (so it's not a magic bullet, but it could have a more lasting impact than the offshore drilling the campaigns keep bickering about)

- Mandate automatic 401(k)s and automatic IRAs (let's encourage savings, instead of just telling people to go shopping in response to national disasters)

And my favorite:

- Provide taxpayers with simple returns the option of pre-filled tax forms to verify and sign. This last one is a hidden gem of the Obama campaign. I think Obama would be winning soundly in the polls if he ran ads in every state saying: "If you have a job and basic bank interest, you don't need to fill out a long return and do all this complicated, stupid arithmetic that some government bureaucrat is redoing anyway. That bureaucrat will fill out your tax form for you. You just have to sign it and return it."

JOHN MCCAIN

And here are some McCain tax proposals, as listed on his Web site, and why they are not as strong in my opinion.

- Replace income tax exclusion for employer-sponsored insurance with refundable credit of $2,500 for individuals and $5,000 for families (This one is his worst idea, in my opinion. Most Americans have experienced better, cheaper health care under the umbrella of employer programs. However, he would take away the incentive for employers to help create group health care plans. Instead, even more Americans would be on their own to face the overpriced and lousy benefits of individual insurance plans. Granted, I also don't think Obama's plan doesn't go far enough toward a universal health care program, but at least he doesn't step backward).

- Convert Research and Development credit to 10 percent of wages incurred for R&D. (This makes the credit more complicated and actually creates less incentive for research and development)

- Phase in a reduction of the maximum corporate income tax from 35 to 25 percent. (This is a massive corporate cut that would reduce the total amount of tax revenue just when it is most needed to pay off the national debt. And it is unnecessary. U.S. corporations are quite successful despite the current tax rates).