Obama vs. McCain on Taxes

The non-partisan Tax Policy Center has released a preliminary analysis of how the tax proposals put forward by Barack Obama and John McCain would affect Americans across all income levels. The skinny: McCain’s plan lowers taxes in every income bracket, with the highest income brackets receiving the most benefit. Obama’s plan raises taxes on the highest income brackets, and provides the most benefit to the lowest income brackets. But both plans are bad for the deficit.

At CNNMoney.com, Jeanne Sahadi writes:

Under both plans, all American taxpayers could pay a price for their tax cuts: a bigger deficit. 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.

The reason: neither plan would raise the amount of revenue expected under current tax policy – which assumes all the 2001 and 2003 tax cuts expire by 2011. And neither plan would raise enough to cover expected government costs during those 10 years.

“Distributionally, they’re markedly different. But in terms of their impact on revenue, the two plans are not terribly different,” said Roberton Williams, principal research associate at the Tax Policy Center and the former deputy assistant director for tax analysis at the Congressional Budget Office.

The same article publishes the following table comparing the plans:

	MCCAIN	OBAMA
Income	Avg. tax bill	Avg. tax bill
Over $2.9M	-$269,364	+$701,885
$603K and up	-$45,361	+$115,974
$227K-$603K	-$7,871	+$12
$161K-$227K	-$4,380	-$2,789
$112K-$161K	-$2,614	-$2,204
$66K-$112K	-$1,009	-$1,290
$38K-$66K	-$319	-$1,042
$19K-$38K	-$113	-$892
Under $19K	-$19	-$567

There’s more to life than money, and Congress has the final say about the budget, but it appears middle and lower-income Americans will be better off under Obama’s plan, while the already wealthy will benefit from McCain’s. What a shock.