# TaxProf Blog

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Thursday, February 28, 2008

### McCain-Obama Tax Calculator 2.0

On Tuesday, I blogged the spreadsheet created by Ted Frank (American Enterprise Institute) to calculate your tax bill under a President McCain or a President Obama.  Ted has updated the spreadsheet to "permit[] one to enter in different salaries, deductions, bonuses, income, and state tax data to determine your new marginal rates."  For further discussion, see here.

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The spreadsheet is still distorted. Try plugging incomes at the lower end of the top quintile of earners. The top marginal brackets reflected are just wrong for those income levels. It's very suspicious that users can't access the underlying formulae. I'll just take it as untrustworthy as anything else out of the AEI.

Posted by: Federale | Feb 29, 2008 5:27:38 AM

The spreadsheet you link to is really a disservice to the public. The methodology is non-transparent and not trustworthy.

In contrast, at our site we present the basic facts of the candidates' tax proposals and link to a calculator based on the reliable, published analysis of the Tax Policy Center. You can find that post here:

http://econ4obama.blogspot.com/2008/09/obama-tax-policy-and-mccain-tax-policy.html

Posted by: Don Pedro of Economists for Obama | Sep 5, 2008 6:59:43 PM

This spreadsheet does not work at all. I am a CPA and an attorney with an LL.M. in taxation. I am an expert at Microsoft Excel and I am looking at the formulas and they are completely inaccurate. Cell C21 does not include reference to the percentage in C10, therefore if you do not live in New York City and change that percentage to your own state's tax rate, it has no effect. How do you make a cell (C21) which purports to calculate state tax, when it makes no reference to the state tax rate (C10)?!?

Generally speaking, why make a schedule that doesn't work for people who make less than \$78,850? Not everyone is a fifth year associate at Sullivan & Cromwell making \$280,000 a year. What country do you live in? I live in Manhattan as well but I understand that there is a whole great big nation outside of our island. When one Googles "obama tax calculator" on the World Wide Web your schedule comes up first, and it is utterly useless in 9,826,280 out of the 9,826,630 square miles of our country's area. Tell me the password so I can Unprotect the sheet and I will fix it for you, free of charge.

Posted by: Bob Scofield | Sep 18, 2008 9:49:43 AM

Bob,

I tend to agree with you in principle. I also don't like spreadsheets that are misleading or ill-constructed. Especially since they bear the imprimatur of being mathematically accurate when they often can be equally or even more dangerous than plain old rhetoric.

So, that said, here is a backdoor password I recovered that should crack sheet 1 in the workbook for you--> 7b3b1b5b5b1b1 <--I'm not sure you whether will be able to make this sucker more accurate or not-and I will review any attempt with the same caution I reviewed the original-but I'd surely like to see your attempt.

As a side note, I also agree that it is odd when people discuss the pros and cons of our choices for leaders through \$280,000 rose colored glasses. Good luck to you.

Posted by: Gabriel | Oct 7, 2008 8:39:34 AM

I used Robin Hood's calculator. A single man that makes \$10,000 gets an Obama tax rebate of \$757.40.

I am a retired single man(Democrat) that makes \$75,000 with a state pension and annuities I have saved years for. Yet, my rebate is only \$433.92.

If I pay 7.5 times the taxes, why is my rebate lower?...Oh! I get it.....Robin Hood Obama wants me to spread my good wealth around, and Joe wants me to be patriotic. I'm supposed to give it away!

This is socialism at its finest...comrads!!

Posted by: Pete Kay | Oct 15, 2008 8:13:17 PM

It's amazing how people are voting to have their taxes increased so dramatically. It seems the government has enough money. Their just not so good at managing it.

Posted by: | Oct 17, 2008 1:52:34 PM

This is the most hilarious tax calculator I've seen!!
"Spreadsheet is not accurate for taxable income below \$78,850" Let's see that would be about 74% of US households in 2004!
householdshttp://en.wikipedia.org/wiki/Household_income_in_the_United_States

Posted by: ben | Oct 27, 2008 2:42:56 PM

In response to the below post.

The U.S. tax has been a "progressive" income tax since its inception by Abraham Lincoln and its modification and constitutional implementation under Theodore Roosevelt (both Republicans). You're statement about Obama's tax plan being "socialism at its finest comrades" is just uninformed and plain wrong.

The current tax code would do the same thing. A single man earning 10,000/yr is going to get a larger refund because the government recognizes that \$10,000 isn't anything. Also, like I said before the tax code has always been progressive, with larger earners paying larger amounts. That being said, enough loopholes have been written into the code to allow those with money to "game" the system and actually pay less than they should be. Obama wants to close these loopholes, not out of some socialistic idealism to "spread the wealth", but out of a desire to make the system fair and make those who should be paying, actually pay what they should.

Plain As Day.

Gabriel posted:
Posted by: Gabriel | Oct 7, 2008 11:39:34 AM

I used Robin Hood's calculator. A single man that makes \$10,000 gets an Obama tax rebate of \$757.40.

I am a retired single man(Democrat) that makes \$75,000 with a state pension and annuities I have saved years for. Yet, my rebate is only \$433.92.

If I pay 7.5 times the taxes, why is my rebate lower?...Oh! I get it.....Robin Hood Obama wants me to spread my good wealth around, and Joe wants me to be patriotic. I'm supposed to give it away!

This is socialism at its finest...comrads!!

Posted by: Shon | Oct 29, 2008 5:17:49 AM

I love when peoople use buzzwords that they don't understand - Gabriel calls it socialism. Look up the definition man! Socialism is, in a nut shell, the government control of the means of production(businesses). It has NOTHING to do with taxes or distribution of wealth. But if that blowhard drug addicted fat head Rush Limbaugh says it then it must be true!

Posted by: kevin | Oct 29, 2008 5:52:11 AM

Did anyone really expect an honest effort here? Just another arm of the same dishonest lie machine.

Posted by: RD | Oct 29, 2008 9:24:46 AM

I don't look for handouts. I am CEO of a family of 5, pay \$960 a month for an 1,800 sq. ft home (because many \$250,000+ decided to make this area home and you can't rent any cheaper) and still manage to provide a semi-comfortable life for my family on \$32,000 per year. My husband is an arborist and I am a student. Here's the difference in the classes.....some of us will STARVE if our taxes go up. No because we are unintelligent or lazy, but because insensitive, greedy, oblivious morons don't seem to understand that someone has to pay the bills in this country and it makes the most sense that those cashing in the most pay the bigger share. It is ok for my kids to be hungry because you were lucky enough to get paid what your worth or more? My husband can die trimming your trees and makes \$16 an hour. When the affluent decide his LIFE is worth more, then maybe I'll try to understand the whining.

Posted by: stella | Oct 29, 2008 10:14:43 AM

I'll tell you what:

I do not believe that we are even discussing this. I tell you it only demonstrates the man's ability to lie, and nothing more. It is a shameful gimic!

To wit: If you are basing your vote on this, please, use the calculator. Estimate your savings, both usinging everything they promise and 'bare bones' to get a base line of what he is saying you will save. Print it out or write it down. This is his 'promise' and proves the exact 'dollar value' of Obama's Word. This is what he says his word is personally worth to you.

Two years from now, when doing your 2009 taxes, use the 2008 forms and deductions. If the IRS no longer publishes the old forms or makes you pay for them, be VERY suspicious. Then use the 2009 forms. If you simplify by leaving out the deductions for anything other than your filing status and your income and the number of dependants, you can use the EZ form for a 'rough' estimation, which is probably more honest than this calculator, by the way. This is close enough for you to verify the veracity of the 'purported' savings.

See what the result is. I DARE you. I know this man lies. I know people believe he makes them uncomfortable because of the color of his skin, and attribute their uneasiness to that. I CHALLENGE you. Do this, and then vote for him. Then realize what the truth is later.

You won't do it, because you fear knowing the truth. You can't face it, and know it means you were played for the fool. Flat out and undeniable. They will have no-one to point the finger at this time. They will lie and lie and lie more to cover the other lies. That is the 'best' they can do.

Yes, by all means, get rid of the failed ideas he an his ilk have have been pushing and pedaling for 40 years. THAT is the failed policy we need to rid ourselves of. The great solicialism of the American 'Democratic' Party.

Posted by: Mel | Oct 29, 2008 8:19:11 PM

Why don't people use this calculator too? http://taxcut.barackobama.com/

First of all, Mel's comments about the taxes in 2009 are all circumstantial. Where's the evidence? How do you "know this man lies"? Every politician has changed their minds on policies at various points in their careers, McCain included - so that argument just doesn't hold up. Personally, I would rather see the majority of Americans receive a tax cut instead of continuing to line the already comfy pockets of the Wall Streeters, CEOs, and Investment Bankers. Quite frankly Mel, your comments make me feel uncomfortable - you sound like you fall squarely in the narrow minded, intolerant, racist camp of Limbaugh himself using taxes to disguise that unfortunate quality you retain.

Posted by: KB | Oct 30, 2008 7:19:40 PM

I'm sorry Gabriel but I don't believe that you are a democrat because you lied about your calculations. I duplicated both calculations you mentioned on Barack's tax calculator and you would get a bigger tax cut than the single male earning under 10,000. Stop posing as a democrat and posting misleading data to misrepresent Obama. If you look at McCain's plan neither you or the young single male will get any tax cut. The only ones who will are the people who got us in this mess and are already being bailed out using our money. Obama is not Socialist, McCain is, but only for the rich.

Posted by: | Oct 31, 2008 12:22:02 PM

I am up in the \$200,000 range and I've been paying close to 50% when you add in AMT, Social Security and medicare and state and local taxes. In the new system I will take home more if I get a lower paying job. I intend to do that. Who needs the stress and aggravation of a high income when you just give it to someone who works 40 hours a week (or less). Remember those real with wealth do not need the United States of America. They can take their businesses to any country that wants jobs (that is all of them). We can wait and learn what the chinese learned under Mao, when millions starved to death, when there is no reward for hard work, there is nobody willing to do the hard work.

Posted by: sidney | Nov 2, 2008 2:05:33 PM

I'm concerned about all the cash earners who aren't paying taxes on all their income! It is considered the number 2 problem with the IRS (after the AMT targeting middle incomes earners) I'll bet all these under reporters will get a nice tax rebate after all the poor suckers on payroll get nailed for more money!

Posted by: theodore | Nov 2, 2008 2:12:30 PM

I admit i am not a dem. but why is it that some one who might have worked hard their whole life and got far should have to start forking over more money then they already do. Lets say you took a large risk and but all of your savings on the line to get into a medical school and then suceeded and you are now making over \$200,000. So its right that they should be taxed more to pay for some of those people who don't work and get money through using the government. I mean that totally fair right take for the hard workers and give to the lazy bums?

Posted by: DL | Nov 2, 2008 7:06:46 PM

The truth doesn't matter. People believe what they want to believe. They only hear what they want to hear. The candidate that promises the most gets the most votes. History proves that over and over. 95% of us are promised tax cuts. Thats amazing. Only 5% of us should be unhappy about this plan.

But Remember this:

A Government big enough to give you everything is big enough to take it all away too.

Posted by: Doug | Nov 3, 2008 7:00:32 AM

In response to:

"I don't look for handouts. I am CEO of a family of 5, pay \$960 a month for an 1,800 sq. ft home (because many \$250,000+ decided to make this area home and you can't rent any cheaper) and still manage to provide a semi-comfortable life for my family on \$32,000 per year. My husband is an arborist and I am a student. Here's the difference in the classes.....some of us will STARVE if our taxes go up. No because we are unintelligent or lazy, but because insensitive, greedy, oblivious morons don't seem to understand that someone has to pay the bills in this country and it makes the most sense that those cashing in the most pay the bigger share. It is ok for my kids to be hungry because you were lucky enough to get paid what your worth or more? My husband can die trimming your trees and makes \$16 an hour. When the affluent decide his LIFE is worth more, then maybe I'll try to understand the whining. "

You choose where you live and your husband chose his profession. He can change his career and learn a new and more marketable skill, and you could have chosen to have less children if you are truly that close to starving, but it is absolutely ridiculous that you begin your diatribe saying that you are not looking for handouts but end with "but we're going to starve if people who make more money don't carry a heavier load of the financial burden." What, exactly, is your definition of a hand out and why should I be punished for your choices just because I made intelligent financial decisions??

Posted by: Julie | Nov 3, 2008 6:13:23 PM

\$280,000 on your "calculator"?? Are you KIDDING ME!! College educated, 29, white, male, I make \$65,000 and I did it on my own with hard work!! I get taxed LESS under Obama's plan. Also, why does Obama's website have a tax calculator while McCain has **NONE**??

Posted by: Gabriel | Oct 7, 2008 11:39:34 AM

Well, a kid mowing lawns all year long for \$3,000 gets ALL his money back, oh man.. that's socialism!! You are completely wrong.

Posted by: David Schultz | Nov 4, 2008 7:24:01 AM

Welfare for everyone...no incentive to get off the couch.

Watch Matlock re-runs...die soon.

Posted by: Jeff | Nov 4, 2008 11:43:24 AM

Where were you when I started my business 18 years ago and made 12 or 14 grand. I had to work 60 hours a week and worry about how to pay a mortgage and buy groceries and all the other bills. Now that my hard work and sacrifice have paid off and I'm above the 200G mark not you or the government have a right to take it. But if you try I will simply lay off 2 or 3 of the 12 people i employ to off set some of it. I know I'm the bad guy here simply because I work hard and I'm nearing that 2%, but poor people don't employ other people. So tax the corporate people if you want but watch what happens in the end.

Posted by: Steve0 | Nov 4, 2008 11:19:12 PM

This is good …

Suppose that every day, ten men go out for beer and the bill for all ten comes
to \$100. If they paid their bill the way we
pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay \$1.
The sixth would pay \$3.
The seventh would pay \$7.
The eighth would pay \$12.
The ninth would pay \$18.
The tenth man (the richest) would pay \$59.

So, that's what they decided to do. The ten men drank in the bar every day and
seemed quite happy with the arrangement, until
one day, the owner threw them a curve. 'Since you are all such good customers,
he said, 'I'm going to reduce the cost of your
daily beer by \$20. Drinks for the ten now cost just \$80.

The group still wanted to pay their bill the way we pay our taxes so the first
four men were unaffected. They would still
could they divide the \$20 windfall so that
everyone would get his 'fair share?' They realized that \$20 divided by six is
\$3.33. But if they subtracted that from
everybody's share, then the fifth man and the sixth man would each end up being
paid to drink his beer. So, the bar owner
suggested that it would be fair to reduce each man's bill by roughly the same
amount, and he proceeded to work out the
amounts each should pay.
And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid \$2 instead of \$3 (33%savings).
The seventh now paid \$5 instead of \$7 (28%savings).
The eighth now paid \$9 instead of \$12 (25% savings).
The ninth now paid \$14 instead of \$18 (22% savings).
The tenth now paid \$49 instead of \$59 (16% savings).

Each of the six was better off than before And the first four continued to
the men began to compare their savings.

'I only got a dollar out of the \$20', declared the sixth man. He pointed to the
tenth man,' but he got \$10!'
'Yeah, that's right', exclaimed the fifth man. 'I only saved a dollar, too.
It's unfair that he got ten times more than I!' 'That's true!!' shouted the
seventh man. 'Why should he get \$10 back when
I got only two? The wealthy get all the breaks!'

'Wait a minute,' yelled the first four men in unison. 'We didn't get anything
at all. The system exploits the poor!'

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat down and
had beers without him. But when it came time
to pay the bill, they discovered something important. They didn't have enough
money between all of them for even half of the
bill!

And that, boys and girls, journalists and college professors, is how our tax
system works. The people who pay the highest
taxes get the most benefit from a tax reduction. Tax them too much, attack them
for being wealthy, and they just may not
show up anymore. In fact, they might start drinking overseas where the
atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D.
Professor of Economics, University of Georgia

Posted by: | Nov 5, 2008 5:58:36 AM

I'm pretty good at math and taxes. We have always lived below our means, saved a little and moved from state to state to stay employed. The one year we had a huge income was the year my husband went to Iraq as a civilian contractor, worked 5700 hours and was in a car that was blown up by an IED. For all that we were in the highest tax bracket. Together we worked the hours of 4 people working full time and paid over twice the taxes those people would have paid. There is nothing in our tax codes that gives a break for working more hours, there's only punishment.

That said when I look up what we'll pay under Obama it appears to be a small amount less. For that small amount, my neighbor will have to pay more. I am horrified!

Posted by: Army brat | Nov 5, 2008 12:45:16 PM

Okay first I admit I know nothing about taxes other than how to do my own at years end and I am not good at math.
I finished high school, married and had two children, worked at low paying jobs my entire life.
Between my husband and myself we bring home 43,000.00 a year, our children are now adults and away from home.
We always owe a little in taxes.
Now here's the thing, we don't make a lot of money but we also do not expect those who make a lot of money to give us anything. We work, we get paid for our work.
The man that owns the business we work for is worth millions, I say good for him, his head for business has given me a job, and yes he lives a much nicer life than I do, but it is from his own hard work and financial sense that he accomplished this.
I don't think he owes me any more than the paycheck I get at the end of the week.
I can't understand this share the wealth thing, you get what you earn, I think instead of taking from the rich to give to the poor, that the poor should get jobs and stop relying on welfare and handouts.
Live within your means and stop thinking you should be given the high lifestyle without earning it. Not everyone can or should be "the boss".
If poorer people are so unhappy with the life the have, go back to school, out in the long hours and family time and maybe you'll get rich, or maybe not.

Posted by: Khug | Nov 6, 2008 11:39:13 AM

So under this plan you could say that a person in college who makes all straight a's from working hard. But the teacher comes in and says you need to give some of your a's to the students that are making d's because they are not trying. This is the exact concept. Why should we work for the good grade or "success" if we have to give it to somebody that is lazy. Simplified version. Think about it.

Posted by: | Nov 8, 2008 8:46:40 PM