Today, the Urban Institute Brookings Institution Tax Policy Center published a detailed analysis and comparison of the tax policies of Senators McCain and Obama. It represents the most detailed and analytically sound study of their tax policies we are likely to see before the election.
It concludes that compared to current policy, Senator McCain would cut taxes by $628 b. over the next 10 years and that Senator Obama would raise them by $734 b. over the same period. Most of Senator McCains cuts go to middle and high income individuals, while most of Senator Obama's cuts would go to low and middle income individuals. Both would raise revenue by broadening the corporate tax base, and Senator McCain would cut the top corporate tax rate from 35% to 25%. Senator Obama would also raise the capital gains and dividends taxes and eliminate certain foreign tax benefits for individuals and corporations.
The analysis is complicated by the fact that Senator McCain would phase in his increase in the dependent exemption over seven years and his cut in the top corporate tax rate over six years. That phase-in would reduce the 10-year cost of his plan to $253 b. Similarly, on several occassions Senator Obama has said he would eliminate the Social Security and Disability payroll tax income ceiling for those over $250,000. However, his campaign denies this, so the study did not count that tax increase.
As I wrote yesterday, if you include their spending policies, which this study didn't, both would increase future deficits.
Already out of date
AP wire says that Obama just today said he'd eliminate the SS payroll tax cap for folks over $250. I don't understand how the campaign could deny this is a plan or why it was not included in the TPC calculations.
You're looking at strong tax avoidance with an effective marginal federal tax rate at 56-57%. Probably get up to a 65%+ (or higher if you live in say Montgomery CTY) for folks at $1 million+.
OTOH, this would create a ton of short-term revenue especially if SS benefits are not increased as the cap is released.
By CHARLES BABINGTON, Associated Press Writer 19 minutes ago
COLUMBUS, Ohio - Democrat Barack Obama would apply the Social Security payroll tax to all annual incomes above $250,000, which he says would affect the wealthiest 3 percent of Americans.
The presidential candidate told senior citizens in Ohio on Friday that it is unfair for middle-class earners to pay the Social Security tax "on every dime they make, while millionaires and billionaires are only paying it on a very small percentage of their income."
The payroll tax is now applied to all income up to $102,000 a year, which covers the entire amount for most Americans. Under Obama's plan, the tax would not apply to incomes between that amount and $250,000. But all annual income above the quarter-million-dollar amount would be taxed under his plan.
interesting
very interesting.
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