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Posted by on Dec 8, 2008 in Uncategorized | 2 comments

Your Taxes Under Obama

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.”

Will Barack Obama raise YOUR taxes?

Will Barack Obama raise YOUR taxes?

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.

  • Greg

    So, it is interesting that the chart shows 2.9Million, what happens when the income reaches 3 million? Does the McCain plan then go negative? I can’t help but notice the interesting numbers that were selected for the comparison.

    If anything, your numbers make a sensational story that will get peoples attention, but it would be nice to see the brackets where the income is impacted and the tax percentages for each income bracket. This extra data would help convince the more educated viewers – or is that what you are avoiding?

    G.

  • http://www.shoeboxed.com Dan Englander

    Greg,

    Great points, and I noticed the same thing when I was watching the CNN video. I think the most important point here is that both of the proposals are just that: proposals. Obama’s plan necessarily hasn’t considered the realities that will he will face while in office. Wars and other spending may impact how he thinks about taxes, and Congress will surely have a say in shaping tax policy. The basic points of the plan are that Obama wants to return the taxes rates on wealthy individuals by about one percent (from 35 to 36%), which represents a huge amount of revenue for the government. McCain was advocating for tax cuts across the board and both candidates were proposing tax cuts for all of the non-super-rich.

    The 95 percent-plus of the American population that earns less than $250,000 would see their tax cuts manifest in the following ways (a partial list):

    • A $500-per-worker tax credit for people who earn less than $150,000 and do not itemize
    • A $4,000 credit per child in college
    • Seniors who earn less than $50,000 would pay no income tax
    • But again, I would stress that this is a proposal that hasn’t seen congressional input or been enacted yet. Also, since everyone has different circumstances (i.e. dependents, kids in college, different income levels, etc.), an income-bracket comparison might be misleading any way you slice it.

      Dan