By Allan Erickson
10.7.08
The economic plans proposed by Sen. John McCain and Barack Obama are detailed on their websites. Both candidates have spoken extensively these last couple of weeks about their plans. We will learn more tonight during the debate.
http://www.johnmccain.com/Issues/jobsforamerica/
http://www.barackobama.com/issues/economy/
Even the best plan in the hands of inexperienced or incompetent people will fail, while a fair plan followed by brilliantly capable individuals will likely deliver some measure of success.
Therefore, even the issue of the economy boils down to experience, competence, and an evaluation of a candidate’s track record of accomplishment.
Another way to evaluate which candidate will most likely deliver results on the economy is to compare the larger issue of economic philosophy.
McCain has made it clear he favors opening markets, investing in small business, lower taxes, a federal spending freeze, drastically reduced federal spending, and regulatory reform to strike a balance between the interests of commerce, government and the environment.
Obama makes it clear he favors renegotiating free trade agreements, until recently he advanced the idea of raising taxes, he has not addressed McCain’s notion of a spending freeze, he has proposed large increases in federal spending, specifics concerning regulatory reform are hard to come by, yet many observers believe Obama’s reforms in this area will tilt in favor of environmentalism and against business, especially the oil business.
Closely associated with the success of any economic plan is the question of energy.
Obama favors Green Jobs, and opposes drilling offshore. He also opposes nuclear energy. It is unclear how he stands on clean coal.
McCain favors promoting alternative energy but says we have to bridge from here to there by aggressively developing all sources of domestic supply: drilling offshore and elsewhere, development of nuclear power plants, clean coal, and other sources.
It appears McCain’s energy plan makes more sense and carries less risk compared to Obama’s approach.
From my point of view, I’ve seen what conservative economics embraced by McCain did for our country in the late 80s and into the 90s thanks to Ronald Reagan.
I’ve seen what liberal economics did during the Carter years, and following the Clinton administration’s tax and spend policies, which led, in part, to the current housing crisis, mortgage failures, and credit crunch.
We all saw the positive impact of Bush’s tax cuts, tax reductions Obama would kill.
It is important to remember, whenever you hear the mantra ‘tax cuts for the rich,’ that 86% of income tax revenue is paid by the upper 25% of income earners in this country.
According to the Tax Foundation: http://www.taxfoundation.org/news/show/250.html
The latest release of Internal Revenue Service data on individual income taxes comes from calendar year 2006, a year in which the economy remained healthy and continued to grow, increasing individual income tax collections along with overall average effective tax rates.
This year’s numbers show that both the income share earned by the top 1 percent of tax returns and the tax share paid by that top 1 percent have once again reached all-time highs. In 2006, the top 1 percent of tax returns paid 39.9 percent of all federal individual income taxes and earned 22.1 percent of adjusted gross income, both of which are significantly higher than 2004 when the top 1 percent earned 19 percent of adjusted gross income (AGI) and paid 36.9 percent of federal individual income taxes.
The IRS data also shows increases in individual incomes across all income groups (see Table 3).
Below, consult a comparative analysis of the candidates’ tax plans as they stand according to: http://www.taxfoundation.org/candidates08/
However, late breaking news—Obama was consulting today with his economic advisors asking for a whole new economy recovery plan.
Finally, I will be listening tonight to hear which candidate most urgently addresses the need to balance the federal budget and pay off our debt. The former comptroller general says we are so far behind we will tank in 15-20 years given the huge demands for federal payouts through Social Security, Medicare and Medicaid, demands we cannot presently meet given the declining work force. He says if things do not change, we won’t be able to fund the military in 15-20 years. With the passage of this $1 Trillion bailout, it may be more like 10 years.
All things considered however, it seems to me McCain has a much better handle on where we have been, how we got here, and what we need to do to get where we want to go. And, he tried to head off this mortgage crisis years ago, but the Democrats stood in his way, another reason to support McCain.
As to rapidly digging our way out of the current crisis, it was McCain who showed up in D.C. in person last week, influencing positive changes to the bailout bill, including a removal of the AMT if I recall correctly.
And interestingly, McCain’s website carries a long list of endorsements from noted economists, something missing from Obama’s site, unless I missed that list.
Election 2008
Presidential Candidate Tax Plan Comparison
|
|
John McCain |
Barack Obama |
|
Marginal Individual Income Tax Rates |
Continue the lower rates enacted in the 2001-03 tax cuts. (Source). |
Maintain the current 10, 15, 25, and 28 percent rates from the 2001-03 tax cuts, but allow the top two rates to expire (the 33 percent rate would rise to 36 percent; the 35 percent would rise to 39.6 percent). Eliminate all income taxation of seniors making less than $50,000 per year. (Source). |
|
Corporate Income Tax |
Cut rate to 25%, (from current 35%) fully phased in by 2015. (Source). |
Eliminate capital gains taxes on start-up and small businesses (Source). “Level the playing field for all businesses by eliminating special-interest loopholes and deductions.” (Source). |
|
Tax Reform |
No specifics available. Taxpayers choose between the current system or “a vastly less complicated system with two tax rates and a generous standard deduction.” (Source). |
No specifics available. Instruct IRS to provide pre-prepared tax forms for many filers (Source). |
|
Estate Tax |
15% tax rate on estates over $5 million ($10 million for married couples). (Source). |
45% tax rate on estates over $3.5 million ($7 million for married couples). (Source). |
|
Social Security Payroll Tax |
Opposes increasing the payroll tax from the current 12.4% on wages up to $102,000. Supports supplementing the current Social Security system with personal accounts. (Source). |
Social Security tax would be 12.4% for income from zero to $102,000; 0% for income from $102,000 to $250,000; and 4% from $250,000 and up, effective 2018. (Source). |
|
Alternative Minimum Tax |
Phase out the AMT (Source). |
Extend AMT patch. |
|
Capital Gains & Dividends Taxes |
Maintain the 15% rate on capital gains and dividends. (Source). |
Raise capital gains and dividends rates to somewhere between 20% and 28%, keeping them equal. |
|
Other Tax Policies |
-New refundable health care tax credit ($5,000 for family coverage, $2,500 for individual coverage). Replaces the current exclusion for employer-based health insurance premiums. (budget neutral) |
- Create a new “Making Work Pay” refundable income tax credit of up to $500 per person or $1,000 per family. It would offset the payroll tax on the first $8,100 of earnings. |
Posted by Allan Erickson 
Posted by Allan Erickson 
Posted by Allan Erickson 