The Tax Policy Center has recently updated the Presidential Candidates’ Tax Policies. I encourage you to read the entire report:
A Updated Analysis of the 2008 Presidential Candidates’ Tax Plans: Executive Summary – August 28, 2008
The summary report is only 6 pages long and contains some helpful graphs.
For the lazy, and to aid in initiation of debate and discussion, I will parse out what I feel to be some of the more essential elements of the report.
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Both John McCain and Barack Obama have proposed tax plans that would substantially increase the national debt over the next ten years, according to a newly updated analysis by the nonpartisan Tax Policy Center.
Neither candidate’s plan would significantly increase economic growth unless offset by spending cuts or tax increases that the campaigns have not specified.
Compared to current law, TPC estimates the Obama plan would cut taxes by $2.9 trillion from 2009-2018. McCain would reduce taxes by nearly $4.2 trillion. These projections assume the 2001 and 2003 tax cuts expire in 2010 and that the Alternative Minimum Tax is fully effective with 2008 exemptions.
Both candidates prefer to compare their plans to the “current policy” baseline, which would extend the 2001 and 2003 tax cuts and indefinitely extend an indexed AMT “patch”–and collect nearly 3.6 trillion less than under current law over the coming decade, while McCain would lose $600 billion. But choice of baseline doesn’t change how the proposals would affect the budget picture; without substantial cuts in government spending, both plans would sharply increase the national debt. Including interest costs, Obama’s tax plan would boost the debt by $3.5 trillion by 2018. McCain’s plan would increase the debt by $5 trillion.
The Obama plan would reduce taxes for low- and moderate income families, but raise them significantly for high-bracket taxpayers. By 2012, middle-income taxpayers would see their after-tax income rise by about 5 percent, or nearly 2,220 annually. Those in the top 1 percent would face a $19,000 average tax increase–a 1.5 percent reduction in after-tax income.
McCain would lift after-tax incomes an average of about 3 percent, or $1,400 annually, for middle income taxpayers by 2012. But, in sharp contrast to Obama, he would cut taxes for those in the top 1% by more than $125,000, raising their after-tax income an average of 9.5 percent.
These projections are built on descriptions of the candidates’ plans provided by senior McCain and Obama staff. However, TPC has also projected costs based upon what candidates have actually said on the campaign trail, and those promises paint a quite different picture.
- Â TPC estimates that one version of McCain’s proposal to create an optional simplified individual income tax system would increase the cost of his plan by more than $1 trillion over 10 years.
- Obama has proposed raising the payroll tax for those earning over $250,000. Again, he has not provided details, but TPC assumes this would be a 2 percent income tax surcharge on adjusted gross income. . .Such a plan would increase taxes on high-income workers by nearly $400 billion over a decade.
What About Healthcare?
In the July 23 update of its analysis, TPC added a preliminary estimate of the candidates’ health care proposals. Because the campaigns did not provide complete plans, TPC assumed certain details.
We conclude that the McCain plan, which would replace the current exclusion for employer-paid premiums with a refundable income tax credit of up to $5,000 for anyone purchasing of health insurance and make other changes to the healthcare system, would increase the deficit by $1.3 trillion over 10 years and modestly trim the number of uninsured.
The Obama plan, which would make relatively low-cost insurance available to everyone through non-group pools and subsidize premiums for low- and moderate-income households, would cost $1.6 trillion, but would also cover virtually all children and many currently uninsured adults.
TPC projects the McCAin plan would trim the uninsured by 1 million in 2009 and nearly 5 million by 2013, although their numbers would slowly rise thereafter because the tax credit would fail to keep pace with premiums. Obama would reduce the uninsured by 18 million in 2009 and 34 million by 2018. Even under the Obama plan, however, 34 million Americans would still lack insurance in 2018.
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