To help Americans pay for the increasing price of a gallon of gas, Hillary Clinton is suggesting a suspension of the 18.4 cent per gallon tax on gasoline and 24.4 cent per gallon tax on diesel from Memorial Day through Labor Day while enacting a “windfall profits” tax on the oil companies which have been making money hand over fist through out 21st century so far. John McCain is also in favor of a gas tax “holiday,” but Barack Obama calls this strategy pointless and possibly more harmful for the economy.
Obama figures that the gas tax holiday would save American consumers about 30 cents a day while underfunding the federal fund that pays for road improvements. And while we’re in an election year, Obama points out that Clinton and McCain’s positions are political posturing moves rather than good economic solutions.
Ignoring the fact that when a tax holiday is in practice, gas prices might simply rise to negate the savings and match what consumers are willing and able to pay, the 18.4 cent theoretical reduction in a gallon of gas will be almost invisible. With a gallon of gasoline around $3.60 for me here in New Jersey, this 5% discount doesn’t even bring the price down to its level from a few months ago.
Clinton suggests paying for the loss of government income by increasing windfall profits taxes for the oil industry. If there is a gas tax holiday, should oil companies pay for the loss of government income through taxes assessed for earning significant profits in this economy? I feel no pity for the large corporations, and I wouldn’t mind if their taxes increase. However, I don’t think this solution would improve the economy.
As a country, we seem to be willing to continue spending on gasoline no matter what the price, but perhaps that is only because we have little choice. If we stop driving, we stop going to work, earning money, and feeding our families. We’re ready to spend as much on gasoline as necessary to continue our lives, giving oil companies the freedom to keep pushing prices upwards.
The oil industry obviously is not happy about the idea that their profits could be taxed, claiming that taxes would eat into available capital for new production, but their profits are mostly used for buying back stock rather than research and development.
Rather than Clinton’s plan to tax oil companies, McCain wants to freeze or cut spending to pay for the gas tax holiday. Obama thinks these suggestions sound nice to voters but would have little real effect. What do you think?
Photo credit: x-eyedblonde
Obama attacks Clinton’s gas tax plan [AP]
McCain calls for a summer ‘gas-tax holiday’ [AP]
Taxing oil profits: Proceed with caution [CNN Money]
There’s no need for me to explain in detail the favored tax policy by each of the four leading candidates for the President of the United States for two reasons. First, Jeanne Sahadi wrote an excellent tax policy summary for Hillary Clinton, Barack Obama, John McCain and Mitt Romney. Secondly, the candidates’ stances now may be indicative of what will happen once they are sworn into office, but there are hurdles built into the system. Additionally, candidates’ positions can change between now and 2009
Here are some things to take away from what they candidates say they want.
* They all want to preserve recent tax cuts for low- to middle-income earners.
* The two Republicans want to preserve recent tax cuts for households earning over $250,000 while the Democrats want to repeal these cuts.
* Romney wants to lower the rate on the lowest tax bracket to 7.5% from 10% and exempt workers over 65 from having to pay Social Security tax.
* Obama wants to eliminate income tax for seniors earning less than $50,000 and add a $500 to $1,000 credit to all households with working family members (phased out for households with income between $150,000 and $200,000).
* The two Democrats want to expand the earned income tax credit and the saver’s credit.
There are more differences in the article.
The big questions are whether these positions will change as campaigns get tighter and we approach the general election, whether opinions will change once the new President is sworn in, and whether they can get the changes pushed through Congress.
According to the polls, the economy seems to be a hot issue among primary voters, and the candidates’ positions on income tax are related to this priority. Will the economy still be in the front of voters’ minds when the general election rolls around?
Now that we’ve looked inside the financial reports of the major candidates for President of the United States, let’s take a look at the Democrats’ plans for reworking the income tax system if elected. They are as one would predict, very similar.
Hillary Clinton wants to eliminate the “Bush tax cuts” for those earning more than $250,000 (and provide fewer opportunities for deductions) while preserving the cuts for everyone else. She wants to limit tax-free compensation for high-income earners to help pay for health insurance. She would like to raise the rate for the “carried interest” tax, a loophole that lets some fund manage claim their income is a capital gain.
Barack Obama would eliminate income tax for seniors earning less than $50,000, and like Clinton, would let the Bush tax cuts expire for those earning more than $250,000. Obama will also raise the tax rate for carried interest.
John Edwards would let the Bush tax cuts expire for those earning more than $200,000 and categorize fund managers’ pay as regular income, not carried interest.
Your income taxes: What the candidates want [CNN Money]
Money Magazine has an eye-opening look inside the personal financial reports of the leading presidential candidates, including asset allocations and income sources. The article points out anything out of the ordinary with the candidates’ holdings and even offers money management suggestions from a financial adviser.
Hillary Clinton. Net worth: $34.9 million. 2006 income: $12.1 million. More than 85% of her asset allocation is in cash and bonds.
John Edwards. Net worth: $54.7 million. 2006 income: $3.7 million. As a former consultant for Fortress Investment Group, 43% of his assets are in hedge fund investments.
Rudolph Giuliani. Net worth: $52.2 million. 2006 income: $17 million. In 2006, Giuliani averaged one speech every three days for a total of $11.4 million of his $17 million income.
John McCain. Net worth: $40.4 million. 2006 income: $3.9 million. John McCain has donated all of his income from writing — and he has written several books — to charity. Everything except $50,000 is in his wife’s name or in a trust for his children.
Barack Obama. Net worth: $1.3 million. 2006 income: $991,000. $350,000 is split between a socially responsible index mutual fund and a managed fund with a 60/40 mix of bonds and equities.
Mitt Romney. Net worth: $202 million. 2006 income: $37.6 million. His high income is due to timely sales of stocks that might be deemed “politically sensitive,” like those of European oil companies that do business with Iran.
Fred Thompson. Net worth: $8.1 million. 2006 income: $9.4 million. Fred’s acting career has seen him playing POTUS as well as other political roles, including himself. He has $3.2 million in cash right now. If he doesn’t successfully run for president, that cash will help him pay for his retirement.
Millionaires-in-Chief [Money Magazine]
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