After reading this article on cnnmoney I’m kind of annoyed about the tax plans that Obama and McCain are putting forth. At their basic level, the two plans aren’t all that different from stuff we’ve seen from the two major parties before, but its still nice to see the exact differences and how each one will effect you. You can read all of the specifics in the article, but I’ve including the key portions below.
Under McCain’s plan
The net result: compared with their tax bill today, taxpayers on average would see their tax bill cut by nearly $1,200. That means their after-tax income would rise by 2%.
But those in the lowest income groups would only see their after-tax income rise by less than 1% (or between $19 and $319). By contrast, the highest-income households – those with incomes of at least $603,000 – would see a boost in after-tax income of 3.4%, or more than $40,000.
Under Obama’s plan
The net result: compared with their tax bill today, taxpayers on average would see their tax bill cut by nearly $160 under Obama’s plan. That means their after-tax income would rise by 0.3%.
But those in the lowest-income groups would enjoy the biggest after-tax income rise as a percentage of income – between 2.4% and 5.5% (worth between $567 and $1,042). By contrast, the highest-income households – those with at least $603,000 in income – would see a dramatic decline in their after-tax income – a drop of 8.7%, or $116,000.
For what its worth, I’m favoring Obama’s plan. I have to support making it easier for people that don’t make as much to buy things they need like food and clothing, than giving the super rich people in this country more money to buy another boat or a second or third house. I like capitalism, but I’m not a fan of the ridiculous excess that ends up coming with it.
That part of the whole article that just fries me is the portion below.
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.
We always hear politicians talking about fiscal responsibility, but none of them seem to get the concept that paying off your debts is a fiscally prudent thing to do. I recognize that the economy isn’t as simple as I’d like it to be, but at least an effort needs to be made to pay down the debt. I find it ironic that more than a few members of Congress and political appointees in government were successful businessmen prior to entering government and politics, yet they continue to run the government in a manner that would bankrupt their companies in a second by spending more money than you take in.
I wasn’t sure of all of the negatives of a huge national debt so I went to my Wikipedia crutch. It turns out there is an argument for carrying a national debt, but given the example of Japan in the Wikipegia article, it doesn’t sound like the best idea.
I’m still in favor of paying down the debt, and at the very least not pursuing policies that are going to make it bigger. Can anyone say Balanced Budget Amendment? The CNNMoney article notes that the candidates’ plans will likely be adjusted some as time goes on, and as more information is available the analysis will change. Let’s hope the changes that are made are positive, but I’m not going to hold my breath that paying down the debt is going to be a part of that.