Tax Positions Of Obama and McCain

[bluffmanxx]

This thread is inspired by this statement...

Originally Posted by calgaryjimbo

His platform has taxes dropping for the vast, vast majority of taxpayers.

It was made here in a thread that really has nothing to do with taxes or the Presidential Candidates...hence the new thread.

First a few facts about taxes in the US....

Their Fair Share an article from the Wall Street Journal

Washington is teeing up "the rich" for a big tax hike next year, as a way to make them "pay their fair share." Well, the latest IRS data have arrived on who paid what share of income taxes in 2006, and it's going to be hard for the rich to pay any more than they already do. The data show that the 2003 Bush tax cuts caused what may be the biggest increase in tax payments by the rich in American history.

The chart shows that the top 1% of taxpayers, those who earn above $388,806, paid 40% of all income taxes in 2006, the highest share in at least 40 years. The top 10% in income, those earning more than $108,904, paid 71%. Barack Obama says he's going to cut taxes for those at the bottom, but that's also going to be a challenge because Americans with an income below the median paid a record low 2.9% of all income taxes, while the top 50% paid 97.1%. Perhaps he thinks half the country should pay all the taxes to support the other half.

Aha, we are told: The rich paid more taxes because they made a greater share of the money. That is true. The top 1% earned 22% of all reported income. But they also paid a share of taxes not far from double their share of income. In other words, the tax code is already steeply progressive.

Now that we know who pays the most income tax, let's consider another tax. Social Security. This tax really hits the low income earners - yet Barack Obama is in love with Social Security as it is. Problem is, Social Security is a train wreck waiting to happen. The only way to keep it afloat is to both raise taxes and cut benefits. Remember the vast majority of American taxpayers pay more in social security tax than they do in income tax!! Obama has not proposed any cuts for low income earners in their social security taxes...and has proposed a massive increase on high income earners...but has cleverly proposed that this huge tax hike take place long after he would be out of the White House, even if he were to be elected to 2 terms as president. Talk about passing the buck and dooming the following administration to economic failure...all i can say is WOW!!!

Some facts on Social Security

The Social Security program that would eventually be adopted in late 1935 relied for its core principles on the concept of "social insurance." Social insurance was a respectable and serious intellectual tradition that began in Europe in the 19th century and was an expression of a European social welfare tradition. It was first adopted in Germany in 1889 at the urging of the famous Chancellor, Otto von Bismarck. Indeed, by the time America adopted social insurance in 1935, there were 34 nations already operating some form of social insurance program(about 20 of these were contributory programs like Social Security).

Benefits are funded by taxes imposed on wages of employees and self-employed persons. As explained below, in the case of employment, the employer and employee are each responsible for one half of the Social Security tax, with the employee's half being withheld from the employee's pay check. In the case of self-employed persons (i.e., independent contractors), the self-employed person is responsible for the entire amount of Social Security tax.

According to the Social Security website, "The tax rate in the original 1935 law was 1% each on the employer and the employee, on the first $3,000 of earnings. ($60) This rate was increased on a regular schedule in four steps so that by 1949 the rate would be 3% each on the first $3,000.

According to a 1936 pamphlet on the Social Security website, the federal government promised the following maximum level of taxation for Social Security, "... beginning in 1949, twelve years from now, you and your employer will each pay 3 cents on each dollar you earn, up to $3,000 a year. That is the most you will ever pay." (total $180)

However, according to the Social Security website, by the year 2008, the tax rate was 6.2% each for the employer and employee, and the maximum income level that was subject to the tax was $102,000 raising the bar to $6,324 maximum contribution by both employee and employer (total $12,468).

Obviously we should have fixed this seriously flawed program decades ago...but proposals to begin privatization were were shot down early in the Bush Administration.

WASHINGTON (AP) - Trustees for the government's two biggest benefit programs warned Tuesday that Social Security and Medicare are facing enormous financial challenges, with the threats to Medicare far more severe.

The trustees, issuing a once-a-year analysis of the government's two biggest benefit programs, said the resources in the Social Security trust fund will be depleted by 2041. The reserves in the Medicare trust fund that pays hospital benefits were projected to be wiped out by 2019.

Both those dates were the same as in last year's report. But the trustees warned that financial pressures will begin much sooner when the programs begin paying out more in benefits each year than they collect in payroll taxes. For Medicare, that threshhold is projected to be reached this year and for Social Security it is projected to occur in 2017.

We had a discussion on Social Security here...which included information on privatization here.

Another interesting idea is the fair tax which gained national attention thanks to Republican presidential candidate Mike Huckabee. We previously discussed the fair tax here.

[WinJStar]

at all that work Douggie.

[bluffmanxx]

Back to the tax plans of Obama and McCain...both propose income tax cuts for a majority of americans...although the actual cuts vary dramatically.

The McCain plan cuts income taxes for all tax brackets, with the largest cuts going to those who pay the most - the "rich".

The Obama plan cuts income taxes for a large majority with the highest earners (who already pay a disproportionate % of taxes) paying even more.

Both income tax plans ADD to the federal deficit...

The Tax Policy Center estimates that over 10 years, McCain's tax proposals could increase the national debt by as much as $4.5 trillion with interest, while Obama's could add as much as $3.3 trillion.

[bluffmanxx]

Originally Posted by WinJStar

at all that work Douggie.

just getting started...but it is late so the rest will have to wait.

[spaceboy761]

Originally Posted by bluffmanxx

Back to the tax plans of Obama and McCain...both propose income tax cuts for a majority of americans...although the actual cuts vary dramatically.

The McCain plan cuts income taxes for all tax brackets, with the largest cuts going to those who pay the most - the "rich".

The Obama plan cuts income taxes for a large majority with the highest earners (who already pay a disproportionate % of taxes) paying even more.

Both income tax plans ADD to the federal deficit...

So basically, we get to decide between tax-and-spend Democubs and borrow-and-spend Republicans. Sweet!

[Garmer]

Originally Posted by bluffmanxx

...and has proposed a massive increase on high income earners...but has cleverly proposed that this huge tax hike take place long after he would be out of the White House, even if he were to be elected to 2 terms as president. Talk about passing the buck and dooming the following administration to economic failure...all i can say is WOW!!!

Are you talking about Obama or the current administration? The economy has been a true disaster during Bush and no real effort seem to have been made in order to correct it even with all the warning signs that has been showing. Americas debt is soon passing 10.000 billion dollar...that's 10.000.000.000.000 dollar! Add the health- and social expenses that the administration has commited to and the number is 53.000 billion dollar (epn.dk - "USA er på fallittens rand"). If we're talking "passing the buck and dooming the following administration to economic failure" then that must be it.
Ironically it's China who's been keeping Americas head above water by increasing their dollar reserves and buying US stocks - but imagine if they had decided to switch to Euros and sell out their dollar reserve. The dollar would be in free fall and the US would be bankrupt.
Anyway, with a debt like this it's going to be unpleasant no matter if it's McCain or Obama in office. I assume the "huge tax hike" is Obamas considerations on imposing a 2 percent to 4 percent tax on incomes above $250,000. Even though it definitely allows him to dodge a political bullet by waiting a decade to implement it, it can hardly be seen as dooming the following administration can it? Also, I find it interesting when McCain wants to expand President Bush's tax cuts and instead "cut down on expenses". Could it possibly be the military expenses he has in mind?

I live in the country that has the highest tax rate in the world (Denmark). The lowest incomes pay about half in taxes and the richest part of the population pay a marginal tax as high as about 70%. Yet several recent reports has listed the danish population as the happiest in the world. That considered, a progressive tax system can't be that bad after all - or in other words having 2 cars instead of 3 wont make the rich people have a shitty life

By the way, did anyone see the movie I.O.U.S.A yet? I haven't had the opportunity yet, but it's probably very relevant for this debate.

[featherlou]

Originally Posted by Garmer

<snip>
By the way, did anyone see the movie I.O.U.S.A yet? I haven't had the opportunity yet, but it's probably very relevant for this debate.

I'm planning to see it. I don't think it's playing here yet, but we'll be keeping our eyes open for it. Excellent post, by the way.

Here's something fun - the US National Debt Clock. Even more fun - hit refresh and watch your debt jump fifty thousand dollars in seconds.

[featherlou]

Here's an interesting graph that might help your choice for your next political party -

[LadyWrestler]

Originally Posted by featherlou

Here's an interesting graph that might help your choice for your next political party -

World War II is gone, and Ike and Nixon have been moved to the Democrats for this chart?

[Garmer]

I think the colors just indicate declining/increasing national debt and not parties.