Paul L. Caron

Thursday, June 12, 2008

WSJ: The McCain and Obama Tax Plans

Wall Street Journal:  McCain's Tax Plan Favors Wealthiest, Analysis Says; Obama's Skews Benefits to Lower, Middle Classes, by Deborah Solomon:

Both John McCain and Barack Obama promise to cut taxes for the majority of Americans. But an Obama administration would redistribute income toward lower- and middle-class households, while a McCain White House would steer the bulk of the benefits to the wealthiest families, according to a nonpartisan analysis of the still-evolving tax plans of the presidential candidates.


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While it would appear that the middle and lower classes are benefitting more from Obama's plan, no one is discussing the trickle down effect that Obama's plan would ultimately inflict upon the middle class. I am a member of the lower middle class, and I realize that taxing the small businesses and the large corporations is ultimately going to cause money to come out of my pocket. These companies are going to pass their hike in taxes on to the consumer. Groceries invariably will go up, cost of services will invariably go up, clothing, building materials, furniture, etc.... all these items are going to go up. So many of the products we receive go through several hands before getting to the consumer. If each of these "hands" have to pay a higher tax rate, don't you know that they are going to raise their prices. The little bit of "welfare" that Obama is planning to give to me is not going offset the higher prices I'm going to have to pay for groceries, diapers, and formula; all things I have to have. I don't pay for anything with food stamps; I have to live on a BUDGET. Obama's plan is going to blow my budget and your budget out of the water. If you're in the lower middle class as I am, you could easily remove the word "middle" from you class because that's where you're headed with his plan. Wise up everyone.

Posted by: ANeal | Oct 18, 2008 6:45:35 AM

Dr. Balassi-
Please tell me which marginal income tax rate Sen. Obama intends to cut? There isn't one. What he has proposed is a series of refundable "tax credits". This is not a tax cut. It is redistribution of wealth. Low income households do not pay much, if any taxes and the most basic deductions offset any liability at that income level. If they do pay taxes the REFUNDABLE "tax credit" Obama offers is more than their liability, which means they will actually get a check from the IRS greater than what they paid(or would have paid)in taxes. So they are getting more back than they put in....that Dr. is welfare. Also, Obama's "tax credits" are "paid for" by raising taxes on investments and wealthier Americans. Given the current state of economy, raising taxes on capital is dangerous and nearly all economist will agree that it shouldn't be done, which means that his "credits" won't come to fruition until well after the economy recovers. McCain can implement is tax plan in any economic situation and can do it the right way. Lowering taxes in conjunction with decreased spending is the only sustantable way to reduce everyone's tax burden.

Posted by: James Graham | Oct 16, 2008 9:23:46 AM

Your graph on the Presidential candidate's tax proposals is misleading. My understanding is there are breakouts and significantly differing effects in groups over 111,000. i.e. 111 - 161 k will have a tax decrease under both plans. It is only in the bracket over 603,000 that will have an increase from the pre bush tax cuts under the obama plan. Lumping persons making under 500k a year with those making over 2.7 million a year is an intentional misrepresentation of the proposals. Shouldn't your blog be more credible?

Posted by: kbrenner | Sep 21, 2008 10:12:12 AM

The Republicans have been lying about Obama rasing taxes. Obama will cut taxes MORE than McCain for those earning under 112k/yr., and the VAST majority of Americans earn far less than that.

Posted by: Dan Lewis | Sep 9, 2008 3:08:01 AM

So far, Obama’s plan has more benefits than McCain’s. One major benefit is that lower and middle income individuals will consume. This consumption will help businesses create jobs and grow our economy. The real issue is how to turn the lower and middle class people in to savers? I am not sure it’s possible. It might have to come in the form of forced savings accounts. There is a big part of our population which relies on government support for medical and retirement. The wealthy can afford to pay more. This is not too high of a price to pay for economic and social stability.

Posted by: Dr. Steven J. Balassi | Jun 12, 2008 1:46:46 PM