So I wanted to continue a much needed discussion regarding McCain and Obama's economic policies as it started in my post a week ago on the 11th on a completely different topic of foreign affairs.
The economy is a central focus in everybody's minds. I was in NYC this past week with my girlfriend. The first night we were out there we were invited to a dinner party, one of the men who I met there was just coming home from his day at work as an accounting and investments attorney... and yeah we all had a drink or two. It became clear to me how much of the city will be effected by the drop of investor confidence. Finance is the bread and butter of the Big Apple, and the effect which current events on Wall Street and Main Street will have on the nation will last for years. Jobs are vaporizing. Confidence is slipping. We're not quite clear completely what either candidate's plan is yet completely, but details are starting to come in.
Lets talk about a few things. What are the differences between Obama and McCain's tax bill?
John McCain continues to state that Barack Obama will raise your taxes, but who exactly is he referring to when he says, “your”? Well, according to US Census Bureau data and data from the Tax Plan Center, Yes. Your taxes are going up. If you're among the upper 3% of the working population making more than $227,000. Here is a chart from The Tax Policy Center that shows how the average tax bill could change depending on who is elected.
| BREAKING DOWN THE NUMBERS Source: The Tax Policy Center | |||||||||||||||||||||||||||||||||
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| Household Income Distribution Source: US Census Bureau, 2006; income statistics for the year 2005 | |||||||||
| Bottom 10% | Bottom 20% | Bottom 25% | Middle 33% | Middle 20% | Top 25% | Top 20% | Top 5% | Top 1.5% | Top 1% |
| $0 to $10,500 | $0 to $18,500 | $0 to $22,500 | $30,000 to $62,500 | $35,000 to $55,000 | $77,500 and up | $92,000 and up | $167,000 and up | $250,000 and up | $350,000 and up |
I posted this previously without an explanation and the numbers seemed to bring out an awfully confused reaction, so lets talk about it here.
(ed. found these next two charts today from the washington post which visualize the statistics quite clearly)
What do these charts tell us? They tell us that under Obama's plan, less than 5% of the population will be paying more taxes. The five percent that can afford to pay more to their country in a time of economic distress. They'll be paying twice as much back to the government than this top 5% of the salary bracket would be paying under McCain's plan.
We also can gather that middle-class Americans making under 66k annually will be seeing a much higher tax return under Obama's plan, watering the beds of innovation and making it easier for the HUGE middle class of this country to be able to contribute to our economy and stimulate competition--without economic barriers.
No, Actually I'm not drinking any kool-aid. I'm an American just like you, who cares about the problems in this country just as you do. I want the candidate with a clear understanding of the sources of the problems that face not only our national security regarding foreign affairs, but also economic issues.
We don't have all the answers from either of the candidates on how they are going to pay for either of their economic plans, but that among many other important issues are going to be coming up in the debates beginning this Friday. Until then, lets see what McCain has to say about the economy from his own lips...
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20 comments:
I am really intrigued by Stat's initial reaction that "in the mid bracket there isn't that big of a difference."
If you read the data with glasses on, it's pretty clear to me that the two plans are grossly different across the lower/middle-class and the upper-class. I would love for her to elaborate on the point she was trying to make..
What's more interesting is the "how is Obama going to pay for that" question. I'm embarrassed for her for asking that.
Look at McCain's plan. Who is being taxed under McCain's plan?? Who?? That's right.. NOBODY. not even families with incomes OVER $2.87 MILLION. So who's going to pay for that?
Well, they might not be talking about it here, but I've found a few blogs that are trying to spin Obama's tax plan into a catalyst for a new depression. Ironically without even mentioning what McCain's tax plan would do for the economy... typical of McCain's campaign... So far, if you dig into any smear from the McCain camp, you'll find it as nothing but a projection of the McCain's incapacity as presidential material.
Anyhow, I found a random blog post using the little sphere utility I've enabled on this blog (try it!!! It's quite awesome). The blog entry I found was titled "time to bash Obama's economic plan". I encourage you to read it, and then read my reply as I'm pasting below in italics...
First, here's the original rant I'm responding to below...
And here's my reply:
I have to admit, this post got me thinking you may have a point, until I started looking at the actual facts and compared them to the case you try to make. And in contrast to your post, I'm giving references to the facts I'm stating.
During the Great Depression, the Revenue Act of 1932 raised taxes across the board. Obama's tax plans calls for a raise in taxes for the top 1.1% percent of the American working force.. So unless you're making more than $603,402 annually, your taxes are not going up... You can ease up on the McCainorade.
If you were making 0-$4,000 annually in 1932, you were paying 4%-8% back in taxes... HUGELY different from Obama's plan. Obama plans to increase taxes on the upper ONE POINT THREE percent of the salary bracket (those Americans making more than $603,402 a year). These are the Americans who can AFFORD to toss in a nickle and dime to help the economy. Under Obama's plan, if you're making $0-$226,981, you're seeing a return. If you're making $0-$111,645, you'll get back a heck of a lot more than you would under McCain's plan.
"The top rate went from 25 percent to 63 percent".
Well, actually it went from 4-63 percent, but who's counting, it was a long time ago. Regardless, McCain's average cut would be -2%, Obama's would be -0.3%... Seriously, do you think people don't look up the facts when they're faced with voting for a president who has a daunting task ahead of them cleaning up the mess Bush Jr has left us with??
If Bush Sr would have been a man of integrity with foresight and sound judgement, he would have been upfront about the possible necessity to tax SOMEBODY, instead of raise taxes to %31 after realizing his promise was impossible to fulfill two years into his presidency, causing possibly even a slower turnaround from the recession that had already begun and been reported prior to his tax increases.
McCain, if you look at the numbers is planning on sending EVERY American worker a return on taxes. How in the world is he going to pay for that?? You want to talk about an economy going down the drain?!? How can you ignore this BLATANT problem with John McCain's tax plan???
On to Bush in 1990... as you said, Bush raised taxes, although it was not his tax increase that caused the recession.. Quite the contrary. Do some research (or jog your memory) and you'll remember it was the recession that came first, making it impossible for him to keep his word as he assumed the economic growth that started in the 80s would continue when he made his "no new taxes" promise at the '98 RNC. It was only AFTER the recession began that Bush raised taxes. Bush's tax increase brought the tax on the wealthy up to 31 percent (in contrast to 18 percent increase to the top 1.5% as detailed in Obama's tax plan)
Please cite your source regarding Obama's "plan" to increase capital gains "by a minimum of one-third and possibly doubling them"
You can argue till you're blue in the face that Obama's tax on those making more than $226K a year provides no added incentives for work, savings, investment or business expansion, but what about the opportunities that are given to America's working middle-class that has been running at full speed with a ten ton brick in it's pocket. Obama's tax benefits to this middle class tax bracket empowers the working class, those with intrinsic skill sets that can't even pay the bills yet. If you're rich, lazy and resting on your laurels, guess what. You're about to be replaced by someone smarter, younger and harder working than you. There's a FLOOD of entrepreneurs fighting an uphill battle (who can't wait to replace you) in this economy that has done nothing but allow the government to provide loopholes for the rich to keeo their wealth and power... and unless you've been sleeping under a rock, you can see where that's gotten our economy.
Regarding the economy, lets not blank out the fact that John McCain admitted to The Wall Street Journal on November 26, 2005 that "I know a lot less about economics than I do about military and foreign policy issues. I still need to be educated." It's interesting, seeing that John McCain is a member of NONE of the Senate Committees (or subcommittees) on foreign affairs, yet Obama is a member of not only the Senate Committee on Foreign Relations, but also the subcommittees on European Affairs, African Affairs, East Asian Affairs and Pacific Affairs. McCain is a member of none of the above.
Furthermore, we have the energy crisis. A topic those annoying democrat liberals have been crying about for decades. Now suddenly alternative energy is a platform the republican party is running on. Give me a LARGE break.
Im an independent voter who votes on ISSUES not partisan loyalty. It's blatantly clear to me who is getting my vote this November, and I hope you consider it too. Barack Obama clearly has the better judgement of the two. I welcome you to try to change my mind with distractions, but when I look at the cold facts and compare the two men's judgement and putting their money where their mouth is, Obama wins across the board.
I tracked down the original author of the argument I supplied the link to (not hard to do, credit was given, yet no sources sited). The article I sent a link to in my previous comment originated froma blog entry at dickmorris.com.
I signed up to get his emails, paid the necessary $25 fee required to even be able to POST a comment on his blog, posted my response and it has yet to be published... Horray. I guess Dick Morris can dish it out but he can't take it... unless "it" is your money.
So be sure to bring up my points made in the lengthy comment I posted in italics if you hear any of this argument come up... If you see holes in my argument, please I want to discuss it, so don't be afraid to give me your reactions.. Things have been awfully quiet around here.
Thanks, D. I know. I'm not here to smear, I'm not here to pick fights... but when I make points, or ask questions on a public blog, obviously I'm not thinking I'm talking to a wall. I want answers. I want conversation. I think mostly I want people to think about these things..
But yeah, I to would love to hear more thoughts. It is sometimes hard to make a point without bringing something else into the discussion, but I have to say I am frustrated when i do get the comments which do nothing but attempt to detract from the point I'm making, or the relatively straightforward questions I'm asking.
Regardless, as you can tell I've been using this outlet as a soapbox lately. As I'm pretty upfront about, I don't claim to always be right, but I will always speak my mind when I see something that needs to have more light shed upon it.
I'm also human, and have the capacity to learn along the way too.. so if you'd like to speak your mind about how McCain's tax plan is any better or has any better chance of passing congress, I'm calling on you.
You know who you are, I've made my points known in several places (although most of the best ones have still yet to be publicly published, as many of us may be personally familiar with). Lets talk about this.
Whether you follow my points or disagree with them... if not here, please, talk about this somewhere.
Wentzr
Both candidates can put anything they want as an economic plan, and it doesn't mean a hill of beans.
Due to our economic crisis, expecting the majority of the tax hikes to come from the top 5% is not the answer.
The reality of this is to raise taxes, moreso on the wealthy, but pretty much on everyone. That is a reality. Neither side will fess up to this answer, for fear of political suicide. I can see why they are proposing to ease the burden of the middle class, that is the majority of the voters. Lets play a "Lets be honest" for a moment and answer me this....."Why should the middle class get a pass on taxes?"
Thanks for replying D
The top 5% are not only bankers, but companies that create jobs for the middle class. If they have to pay the majority of the debt owing, where do you think they will get the money? If you think about it, it will come from job losses.
When I say everyone will have to pay, I said the top 5% will have to pay more, but reality is, everyone will have to pay in accordance to their ability to pay. This debt didn't come from just bad investments in the stock market. It also came from a lot of middle and lower class people purchasing homes they couldn't afford. They should never have gotten a loan for these mortgages, but they did. Now they are walking away from their homes, leaving the debt with the banks.
My point was also that both sides are coming up with an economic plan just to apease the middle class, because that is where a majority of the voters are. I do not see either plan being realistic.
D-
haha yes i remember when I was a designer for BofA we were NEVER to use the color red (even though it's in their logo) because red says "warning!!" ... well...
... yeah.. enough said.
Stat -
yes, you're right.. "everyone will have to pay in accordance to their ability to pay." Which is why McCain's tax plan makes NO SENSE WHATSOEVER.
Your point holds true, everyone will make a sacrifice to build this country up again... but lets talk about their tax plans. WHO is paying in accordance to McCain's tax plan? NOBODY.
By the way, you want to talk about math not being somebody's forte, What's this about McCain believing that 50% of American small businesses employees are making more than $250,000 a year?What drugs did McCain steal out of Cindy's medicine cabinet before that debate???
Oh yeah.. the debates have been hilarious...
You know who I'm voting for???
THAT one.
Stat, you said:
"My point was also that both sides are coming up with an economic plan just to apease the middle class, because that is where a majority of the voters are. I do not see either plan being realistic."
McCain's plan is just a bit more unrealistic, as it isn't just trying to appease the middle class, it's trying to appease EVERY class therefore it makes even less sense than anything else out there.
I am new to your blog - but appreciate your research! I am curious that no one has picked up on the fact that McCain's health plan (or at least the part he espouses since I have not taken time to research) only addresses health insurance for the employed -and given that we have had 9 consecutive months of job losses, with many more on the horizen, how will those people be insured? At least Obama guarantees that all children will receive healthcare and gives affordable options to others.
and to this:
"The top 5% are not only bankers, but companies that create jobs for the middle class. If they have to pay the majority of the debt owing, where do you think they will get the money? If you think about it, it will come from job losses."
i say...
So BE IT!
The top 5% are offering commodities. If you're making over $250,000 a year in this economy, we need what you're providing, no question about it.
Therefore if the top 5% has grown too large to be able to adapt and offer their commodities at a cheaper cost, and there are previously unavailable potential for the middle class to be able to offer the same commodities at a cheaper price, then I'm all for funding the middle class who has been running up hill at high gear with a giant stonewall in front of their faces for the past eight years.
What happens when you lift your finger out of a glass of water? guess what. it fills in.
I believe our big businesses need to be revamped, and the playing field of the American economy DESPERATELY needs to be leveled to allow competition for the pursuit of a better, faster and cheaper process for ALL. Unchaining the middle class would provide this tilt in the playing field, fueling the economy with more innovative companies who are allowed the opportunity to replace the big companies that have been resting on their laurels, robbing us blind instead of finding better faster cheaper ways to get their products or services to the market.
With competition from below, the whole game changes. If the economic field was set so the HUGE middle class didn't have such an up-hill battle to fight to get off the ground and into the upper tax brackets, we'd see a MUCH larger job growth from the huge middle class than potential job loss in the proven inefficiency of some of the top 5%.
Were Google and Ebay always household names? Have Microsoft and Apple always been giants? No. They started in garages, out of peoples backpacks and in lunch break rooms. They were let into the markets because the middle class was allowed the opportunity they don't have today. Innovation needs to be funded, as that is where the next inevitable economic breakthrough will come from.
wentzr
I believe Obamas' tax plans will be spent tenfold to keep up with his election promises.
I also believe we need agree to disagree. You will not convince me, nor will I convince you.
read my blog when you have a chance
I agree to disagree.
I mean.. really. You're trying to sell a FERRARI because you think I can't afford a HONDA.
I think McCain will have a harder time paying for any of his promises, it's pretty black and white crystal clear, Stat..
I shoulda learned from Ross Perot - even spiffy color charts don't always help people read statistics...
Please, enlighten me. Where is McCain getting his money to turn his promises into a reality seeing that he is not taxing a single bracket??!!!??
You say ""Why should the middle class get a pass on taxes?"
Hello McFly. If you don't think the middle class should get a pass on taxes, why on earth are you arguing in favor of John McCain's tax plan... which is giving EVERY CLASS a break on taxes, including the middle class?!?
Do you remember the 1991 recession? It wasn't long ago, but we do live in the United States of amnesia, so maybe we need another refresher. Bush SR promised the same crap McCain is promising - no taxes... only our economy is in much worse shape today than it was in 1988...
Bush STILL was faced with the inevitable need to ..uhm... RAISE TAXES ACROSS THE BOARD because of his pie in the sky promises of "no taxes" in the 1988 election... McCain is promising the same thing in 2008 what Bush Sr was promising in 1988, only our economy is in FAR worse shape than it was 20 years ago.
Yes, McCain is out of touch with our economy. I don't need to tell you this though, McCain has already said it himself on several occasions while assuring us all that he'd be picking a VP who made up for his shortcomings with understanding Wall Street and the economy. Boy, did he follow through on that commitment!!
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