Taxes 
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NBC Video: Analysis of Obama & McCain’s Tax Plans

Earlier this year, I wrote a post outlining the projected impact of both the Obama and McCain tax plans, as analyzed by The Tax Policy Center. NBC recently produced a two and a half minute piece about the two.

A huge point that the piece makes is that we don’t know how the recent bailouts will affect tax plans going forward. Both plans were introduced in a world where the government didn’t own Freddie Mac, Fannie Mae, or an 80% piece of AIG (and not in discussions for a $700B bailout package!). I personally think that the tax cuts proposed by both sides will be impossible and you’ll have a case of George H.W. Bush’s “Read My Lips, No New Taxes” flip.


 Government 
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Apprehensive About Presidential Tax Proposals

Money Money MoneyAnyone can propose anything.

As the Presidential race heats up, you’re hearing more and more about the tax proposals of both candidates. There’s talk about working class relief, of taxing the rich, of helping the poor and underinsured. There are a lot of campaign promises and proposals designed to get you to vote for one candidate or another. The problem is that the President is only one of three branches of the United States Government. It has no power to legislate and before any of these promises can become a reality… they need to work with the branch that can pass laws, our fine bi-cameral Congress.

(Click to continue reading…)


 Personal Finance 
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Roundup: McCain vs. Obama, Taxes & Other Good Stuff(tm)

If you want to compare the economic policies and plans of Presidential hopefuls John McCain and Barack Obama, CNN Money has a good comparison between the two on a variety of issues from Social Security to Personal Taxes.

Jeremy at Generation X Finance has a very good explanation of why the GAO report of 2/3rds of companies paying zero tax is political hogwash. Besides Jeremy’s good points, famous United States Court of Appeals for the Second Circuit judge Learned Hand once said – “Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.”

SVB tackles the question of saving for college, a question I’m going to put off for a little while.

Nickel’s favorite cashback credit card is the Blue Cash from American Express, a card I don’t have. It seems to have a lot of great features, like a comparison of your cashback performance, and good cashback categories as well.

The Consumerist confirms once again why I love Southwest in publishing it’s top 3 most and least “fee crazy” airlines. Southwest was they’re #1 least fee crazy airline.

Flexo wrote about a study that says sleep makes you smarter.

Have a great long weekend!


 Personal Finance, Retirement 
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McCain on Alternative Minimum Tax

Ahhh the lovely Alternative Minimum Tax. For years the government has been putting patches on the AMT so that it ensnares fewer and fewer people, though without the corresponding adjustment in spending, and we once again dance the same dance now that we have set candidates to the two major political parties. Where do each stand on the AMT?

McCain, during the primaries, proposed doing away with the AMT altogether but recently changed his stance from repeal to phase out. Under the phase-out, more than 4 million households would continue to pay the AMT. To be honest, I doubt McCain really meant “appeal” when he was spoke about it because the thing generates so much revenue, $2 trillion over ten years. He likely meant exactly what he’s saying now, “appeal” it for the middle class but keep it for the wealthy.

I sympathize with the wealthy who feel unfairly taxed for the same services, but the money has to come from somewhere and we all have to buy the same things. While it sucks for someone to have half their next dollar taken away from the government, it hurts that person less than it does someone who has far less earning power (that doesn’t make it right, it just makes it more manageable). Plus, rich people don’t riot. :)

I do think that the government has to reign in its spending (I used to work in defense, I’m aware of some of its excesses) but unfortunately it’s Presidential politics season and it’s far easier to tax a smaller group than reduce benefits for a larger group.

McCain will repeal the AMT. Wait, no … [CNN Money]


 Personal Finance 
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Obama vs. McCain Tax Plans: Obama Saves You More

Rich people, watch out.

The Tax Policy Center broke down the tax policy proposals of your options this November and if you make over $603,000 a year, watch out!

If Barack Obama wins and his plans go through as vaguely outlined, expect your tax bill to go up $115,974. If you make over $2.9M, expect to pay an extra $701,885. Now, if John McCain wins and you make more than $603,000, breathe a sign of relief because you can buy yourself a brand new 2008 Porsche Cayenne with the estimated $45,361 you’ll save. If you make more than $2.9M, buy yourself a new house somewhere with the $269,364 you’d save thanks to McCain.

Of course I jest, because rich people don’t read blogs. They get their people to read blogs and then tell them about it as they are being served tea and crumpets (mmmm crumpets). For rest of us, the 89% that benefit more from Obama’s proposal, our wallets tell us to vote for Obama because his tax policy would result in a greater benefits.

Income McCain
Avg. Tax Bill
Obama
Avg. Tax Bill
Difference
(Obama – McCain)
$2.9M+ -$269,364 +$701,885 +$971,249
$603k and up -$45,361 +$115,974 +$161,335
$227k – $603k -$7,871 +$12 +$7,883
$161k – $227k -$4,380 -$2,789 +$1,591
$112k – $161k -$2,614 -$2,204 $410
$66k – $112k -$1,009 -$1,290 -$281
$38k – $66k -$319 -$1,042 -$723
$19k – $38k -$113 -$892 -$779
< $19k -$19 -$567 -$548



Incidentally, over the next ten years, the Tax Policy Center estimates that McCain’s proposal would increase the national debt by $4.5 trillion and and Obama’s could add as much as $3.3 trillion.

Of course, this is all in good fun, nice campaign fodder, but until things get signed then nothing is set in stone (how did Pelosi’s first 100 days go… forget the first 100 hours).

Here it is in beautiful chart form (courtesy of ChartJunk):
Chart Comparison comparing McCain and Obama Tax Plans

It does a good job of showing not only the differences in the tax rates but also the number of people affected.

What they’ll do to your tax bill [CNNMoney]
90% of Americans will pay less income tax under Obama than McCain [DailyKos]
The economy: McCain vs. Obama [CNN Money]


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