The candidate’s tax plans are complicated for individuals, but according to the Tax Policy Center, a joint venture of the Urban Institute and Brookings Institution, two non-partisan organizations, the national deficit, which is already $10.2 trillion, will increase under both Sens. Barack Obama and John McCain. The deficit is tied to how much Americans pay in taxes. If taxes are low, and government spending is high then the deficit will increase. But both candidates are promising lower taxes.
McCain’s proposed tax plan would reduce revenues by $1.5 trillion over his term because he would extend President George W. Bush’s income tax cuts beyond their expiration of 2010 and reduce government spending.
Like McCain, Obama also plans to reduce government spending, but to a lesser extent. Obama would pay for his plan by increasing taxes for people making more than $250,000 a year. According to Gramlich, under Obama’s plan, the wealthiest one in 1,000 taxpayers would see an 8.8% of income decrease in wealth in 2009 and a 2.7% decrease by 2012.
McCain’s plan of action does reduce taxes for middle-class Americans, but it also increases the wealth of taxpayers with the highest incomes by 4.7% or $290,708 in 2009 and by 11.6% ($680,157) in 2012, says Jeffrey Gramlich, an accounting professor at the University of Southern State Maine. Using the data from the Tax Policy Center Gramlich created a tax calculator that voters can use to see what their tax burden will be depending on who won the election. McCain’s plan will cost the country an additional $4.2 trillion in 10 years time, but for middle-income taxpayers it still doesn’t reduce taxes as much as Obama’s plan, explains Gramlich.
The good news is that the deficit might not be as bad under Obama’s plan as it is under McCain’s.
Middle-class families might pay fewer taxes with Obama but under his plan the national deficit would still increase by $2.9 trillion.
Marcia A. Wade is a reporter at BlackEnterprise.com