Power And Dollar

Obama made his tax announcement on 2008.08.12.  This probably the most valuable plank in any election.  Yet so little attention is paid by the mainstream media.  Is the Olympics Game drowning out all the media space?  This post summarizes the most important points out of the 2 candidates studied by TaxPolicyCenter.org’s research based on IRS data.

Under Obama’s tax plan, 99% of tax units will generate more tax refund (by cash income, see Table 1 of the link).  Only the top 1% of tax units will have to pay more taxes.  

How much do these top 1% earn?

Well, $2,871,682. 

Let’s look at McCain’s tax proposal.  This is the Table 6 of the same link.  Great news!  Everyone gets to pay less taxes!  Even the top 1% pay less.  The lowest 20% of tax units pay $21 less in taxes while the top 0.1% pay $290,708 less!  One may argue that since the lowest 20% have a smaller taxable income, their smaller tax refund increase is justifiable.  That is a very sound argument.  So, let’s see if the tax refund were proportional across income groups.  

The lowest 20% of tax units will see an increase in after-tax income of 0.2% while the top 0.1% see an increase in after tax-income of 4.7%.  This is also McCain’s.  Even Arizona’s newspaper cries fool.

For Obama, the lowest 20% tax units see a 5.5% after-tax income increase while 1.9% for the highest 5% tax units, 0% for the highest 1% tax units.  The top 1% see 8.7% decrease in after- tax income and the top 0.1% see -11.4% decrease in after-tax income. 

People have been wondering about capital gain.  Obama’s announcement also clarified some clouds as well.  TaxPolicyCenter.org checked the numbers on this capital gain issue as well.  

Although 80% of the tax returns claim capital gains in 2006, they take up only 6.2% of capital gains.  These filers are all below $75k in Adjusted Gross Income.  However, 0.3% of all returns take up 60% of capital gains and they are all >$1M Adjust Gross Income filers. 

Obama’s tax plan was absolutely unclear prior to this announcement.  But then it is the voters who can force the candidates to be clear and accountable to their promises.