In the final stretch of this year’s presidential campaign, John McCain turned to taxes as a critical issue in his message. Both McCain and Barack Obama promised to lower taxes, and it seemed that many were unsure who would be cutting taxes the most. With Republicans traditionally the party that tries to lower taxes, Obama’s message of lower taxes seemed almost too good to be true for many. It turns out, however, that Obama’s taxes on individuals would be lower for most people. The cuts he proposes for most Americans would theoretically be made up for by big tax increases for the “super rich.”
Here is a clip from CNN that breaks it down a little bit:
Now this analysis only includes individuals, so it shows how much you might expect your taxes to increase or decrease now that Obama is taking office in January. It does not show how his tax plan for businesses would affect you, which we will investigate in a follow-up post. Basically, if Obama is taxing businesses more heavily, this could come back around and hurt individuals because businesses are less able to pay higher wages and dole out benefits for employees.
For now, though, most people in America should expect that their own income tax should go down. That is, of course, unless you make more than $161,000 — and a LOT more if you are pulling in more that $2.9 million per year. It will be interesting to see now with the economy getting worse and worse to see if Obama can keep this promise or if the federal government will need to bring in more tax revenue.