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Comparing McCain and Obama’s Tax Plans

This article was written by in Taxes. 18 comments.


American Presidential elections are a great big spectacle of promises, speeches, mud slinging, rumors, misinformation and debates. A lot of people make their decisions based on soft aspects like a candidate’s personality. I like to look for the hard numbers that you won’t find on the nightly news, and I found a good summary of the Republican and Democratic tax plans’ proposed effects at CNN Money.

The difference is noticeable mostly for people who earn ridiculous amounts of money: the Obama plan would increase their taxes dramatically. But for most people, it looks like either choice won’t make much of an impact. For my family, it means a difference of only a couple hundred dollars.

There are some important caveats in that CNN article that you should read in full in order to be properly informed if this issue is going to play an important part in helping you make your election decision.

Published or updated September 7, 2008. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Smithee formerly lived primarily on credit cards and the good will of his friends. He is a newbie to personal finance but quickly learning from his past mistakes. You can follow him on Twitter, where his user name is @SmitheeConsumer. View all articles by .

{ 18 comments… read them below or add one }

avatar Miranda

True, most people will see very little change in their tax situation. What I find interesting is what these plans will do to the deficit, according to the CNN article:

“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.”

While both plans will add to the deficit, Obama’s results in a lower amount being added. (Of course, there will be further analysis that could change this.) So, while the GOP yells about how Obama’s plan will increase the deficit, the party is leaving out an interesting bit of information: Their candidate’s policy adds a larger amount to the deficit…

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avatar CJ

This is a good resource. I just wrote an article on “Why Barack Obama is an Idiot” over at my blog this morning. Tomorrow will be “Why McCain is an idiot”.

I think the important thing to note is that most politicians say one thing when they are trying to get elected and do a completely different thing when they actually do get elected. I had voted for Bush for very specific things he promised when he was running for President. Those things never came to pass and weren’t even brought to the table. I don’t trust politicians much anymore.

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avatar Kate

Thanks for the pointer to this easy reference. My family’s income means we’d see a decent tax break whichever man gets elected (provided of course that these aren’t merely campaign promises that evaporate like a drunken vision after the inauguration.) In these days of massive government spending and irresponsible national debt, I find it unconscionable that people as well off as we are are being told they don’t need to contribute so much. This country is basically gambling on the ability of our children and grandchildren to redeem our bad loans, our bailouts, and our extravagant instant gratification – which they’ll have to do without access to the decades of cheap oil that we’ve squandered. It’s embarrassing to watch the republicans chastise the dems for their “tax and spend” ways. Isn’t that better than tax breaks and spending as usual? This country cannot continue forever with our bottomless appetite for convenience and more “services” (like the war in Iraq for instance – do you feel well served by that debacle?) and lower taxes.

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avatar G

I think the bigger question we need to ask ourselves is if we really believe what’s being put out there for us to see. Yes, Obama promises he won’t raise taxes on the middle class. So did Clinton, but then we went and did it anyway; however, he felt bad about it so I guess that’s ok. Do you really think your taxes won’t go up with a democrat in office and a democrat controlled congress? I mean really, how naive are you?

That said, I don’t believe what McCain is peddling either. I think we just need to be careful what we believe – let’s not be sheep and shallow what the candidates feed us!

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avatar CJ

@ G
I completely agree.

The great thing that Clinton did was that he raised taxes as he was walking into a strong economy, but more importantly is that he reduced spending to pay off the deficit.

Obama wants to raise taxes for his little pet project; Universal Health Care. You can’t tell me that we will get Universal Health Care and not get taxed up one side and down the other. Also, you can’t strictly compare their stances on Income Tax. Obama wants to raise just about every other tax out there. It’s sort of misleading when you compare their tax plan side by side on income tax only. His mindset is a very socialist mindset. This of course does appeal to some people, but it scares the hell out of me and I’m half Canadian.

McCain on the other hand wants to lower taxes across the board. This is equally as stupid. The economy is showing signs of recovery. Once it gets going again, it’s time to raise taxes and lower spending.

I would have probably voted for a Democrat this year, but Obama wants to increase spending so much. I think McCain’s lowering of taxes even more is a bad move but he can do less damage to the economy because we have a Democrat Congress. That will keep McCain in check. It would allow Obama to go crazy just like a Republican Congress allowed Bush to go a little crazy.

We really need a legitimate 3rd party to keep these two psychotic parties in check. You’d think people would get fed up by now. The only thing keeping people from voting 3rd party is the extreme partisan gap. People are so incredibly left or right that there is no middle ground. I practically got disowned from my family for registering Independent. It’s ridiculous.

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avatar Mr. ToughMoneyLove

The guy you need to reading about is Charlie Rangel, not Obama or McCain because they do not introduce legislation. They can only veto it. Rangel, Chair of the House Ways and Means Committee (where tax bills start) has promised to introduce the “Mother of All Tax Bills” if a Dem is elected President OR if the Dems get a veto-proof majority in Congress. Be afraid – be very afraid – if you are upper middle class or above.

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avatar Dan

It would have been nice if the CNN article had highlighted the assumptions and inclusions/exclusions from their analysis. Here’s an example. Obama has claimed he won’t be raising taxes on those making less than ridiculous numbers, like say, $250 or something. However, he has proposed increasing the FICA limit, which means a 6.2% (if I recall) tax increase on all earnings over the current limit of 102K. It gradually increases each year, but if you make say 120, the 6.2% on the extra 18K is an extra $1,000 increase in your taxes each year. It isn’t clear if the article took that into account or simply went off of tax brackets, rates and deduction changes.

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avatar David B

Although Obama’s income tax increase will only directly affect a small amount of people, his other taxes will affect everyone much more. For example, he has proposed an increase in capital gains taxes and corporate taxes. Those of us who purchase goods from corporations (i.e. all of us) will see those taxes passed along to us.

@Miranda – I feel obligated to point out that the Tax Policy Center is a subsidiary of the Brookings Institute, which is a left leaning think tank. Needless to say, I have my doubts about just how objective their study is. People on the left always think that the way to increase revenue is to soak the rich and the corporations. Business don’t pay taxes, people do.

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avatar UH2L

This just goes to show that the McCain ads are blatant lies because they say bluntly that Obama will “raise taxes” when he will lower income taxes for the majority of the people and reduce them overall. I put a quote on my blog about “Country First”.

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avatar Jesse

I just want to know why earning that amount of money is “ridiculous” :) I think it’d be great!

I want to see politicians stop spending money first, shrink the budget, cut wasteful spending, and even cut some spending that isn’t deemed wasteful. And then, when we have that suprlus, starting paying off the national debt. Please don’t raise taxes. Please don’t make us pay more so you can exercise your power. Please don’t keep wasting our money. Please just leave us alone.

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avatar Lamar

McCain is giving away more money so he will win.

Very intelligent people have predicted the inevitable destruction of a democracy as such.

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avatar David B

@Lamar

I respectfully disagree. Obama would certainly give more money away. Obama wants to expand “entitlement” programs, and he has a record of wasteful spending. Obama has requested almost a billion dollars in just three years of being a Senator. By contrast, Mccain has a record of being strongly against such spending.

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avatar David

And in case no one noticed, in the last 8 years we have been spent into oblivion by the “cut big government, lower taxes, spend less” Republicans. At this point, even if I was not a Democrat, I would just like to change direction for a few years to see what will happen. You cannot continue to spend like these guys have and continue to cut taxes at the same time; it gets us all nowhere.

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avatar David B

@David

I totally agree. However McCain, specifically, has been publicly critical of his Republican colleagues that spent too much. He has a strong record of voting against his own party in such matters. Obama has done nothing to buck his own party.

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avatar Lamar

Obama will soak the rich to pay for his spending plans plus probably pay down some debt. McCain will extend both the Bush tax cuts and the occupation of Iraq. War is not cheap!

Not saying one is better than the other, but I don’t see how it’s mathematically possible for McCain to be the more fiscally conservative candidate going forward. He’s pretty much continuing the Bush administration, with maybe some plans to cut more discretionary spending here and there.

It’s tax and spend vs. print money and spend.

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avatar UH2L

Ever since he started his run for the presidency, McCain has begun to pander to the conservative Republicans which tells me that he’s not going to fight spending. Has he said anything about reducing the tax breaks for the oil companies? No.

It’s sad that a candidate who tells us the truth, that we need to raise taxes and cut spending to pay down the debt will never get elected. Collectively, us Americans only like to hear positive news and God knows we don’t want to sacrifice anything. So, our country is in big economic trouble. The only way to get out of this mess is for a president/congress to lie and say they will cut taxes and promise programs to get elected and then, they must do the opposite to do the right thing.

As for the McCain commercial, I heard it again today. It does specifically say that Obama would generally raise INCOME taxes so that is a lie based on the chart above. But it doesn’t matter, because people believe lies when they’re on a commercial that is repeated often enough.

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avatar charles

Obama’s tax plan will destroy the Social Security system.

Obama says his income tax plan will lower taxes for 95% of Americans. There is just one problem with this, 40% of Americans already pay no income tax. Obama’s response to this is that these people pay Social Security tax. Well, that’s not income tax, but a contribution to their retirement plan. So if he wins and implements his tax plan, for the first time in the history of Social Security, 40% of the people who will get retirement benefits will have paid nothing for them. Social Security will then loose all pretext of being a retirement plan, and will become a national welfare program.

This will cause Social Security to lose public support in a massive way. Leave Social Security contributions out of income tax plans. If you take some peoples income taxes to pay others Social Security taxes, Social Security will be destroyed forever.

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avatar Luke Landes ♦127,455 (Platinum)

Charles: Social Security was *never* a “retirement plan.” Even when Social Security was first introduced, income for that day’s retirees were paid by taxes collected from that day’s workers. It was never an investment plan and it was never meant to be one. The very first people who received Social Security, and many after, received their benefits without ever paying into the system.

Nothing has changed, this is still how the Social Security system works for the most part. It is wealth redistribution, not an investment plan. “Social” in “Social Security” doesn’t refer to how outgoing these people are in public, it’s closer to the common definition of “socialist.”

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