Taxes

There has been a great deal of misinformation in the media regarding Senator Obama's tax policies if he is elected President. The political commentators who are spreading this misinformation are trying to scare you into voting against Obama with false claims about higher taxes. I will try to present the facts to you as best I can.

Income Tax
Certain political commentators have falsely stated that Obama will cause the biggest increase in taxes in history. This is done to scare the average American into thinking that they will pay more taxes, which simply isn't true. Obama plans to make permanent the Bush tax cuts for all income levels, except for those who make greater than $250,000. The tax cuts for income brackets above $250,000 will be allowed to expire as currently planned.

The Bush tax cuts are set to expire because of legislation passed in 2001 and 2003. The Republican-controlled Congress passed the Economic Growth And Tax Relief Reconciliation Act Of 2001 on May 26, 2001, with a provision sunsetting the tax cuts on December 31, 2010, causing the tax rates to return to their previous levels on that date. President Bush signed the bill on June 7, 2001. The Republican-controlled Congress also included sunset provisions when it passed the Jobs And Growth Tax Relief Reconciliation Act Of 2003 on May 23, 2003. Bush signed the 2003 tax cut on May 28, 2003.

In a May 27, 2001 article, the Washington Post reported, "By terminating the tax cuts at the end of 2010, negotiators were able to avoid some tough decisions. Since they could now distribute the same amount of money over nine years rather than 10 years, they effectively boosted the size of the tax cut while at the same time hiding its true cost."

Still, conservative pundits continue to misinform viewers about Obama’s tax policy. For example, on the June 16 edition of Fox News' America's Newsroom, Republican strategist Andrea Tantaros falsely asserted that under Obama's tax proposal, "an average family making $61,000 - just alone letting the tax cuts expire - would go up $2,100. That's a lot of money for an average family." Tantaros completely ignores that Obama will make permanent the tax cuts for the middle class, and will only let the tax cuts expire for those making over $250,000.

Capital Gains
Another tax proposal of Obama’s is to raise Capital Gains taxes for people making greater than $250,000. In a June 9 interview with CNBC's John Harwood, Obama said, "[K]eep in mind on all of these proposals, what I have said is, let's make sure that we define the well-off so that we're not hitting the middle class. I generally define well-off as people who are making $250,000 a year or more, and that means, for example, if we raise the capital gains tax, I would exempt people who are essentially small investors..."

Once again falsehoods were spread about Obama’s tax policy. On the June 11th episode of Fox and Friends, commentators asserted that Obama would raise Capital Gains taxes on people that have incomes in the five digits. There are six digits in 250,000.

Social Security
The 6.2 percent payroll tax is now applied to all wages up to $102,000 a year, which covers the entire amount for most Americans. Under Obama's plan, the tax would not apply to wages between that amount and $250,000. Obama has said all annual salaries above the quarter-million-dollar amount would be taxed under his plan.

Stephen Moore of the Wall Street Journal wrote that Obama would raise the $100k cap meaning that a police officer and nurse earning a combined income of over $100k would have to pay additional taxes. This is absurdly false. First off, social security taxes are assessed individually. Secondly, Obama's plan only instates social security tax on individuals with salaries over $250K. Thus, a couple could have a combined income of $499k, and, so long as neither individual makes over $250k, they will not see an increase in social security taxes. Columnist George Will made the same false accusation in Newsweek, forcing the magazine to issue a correction in the following issue.

According to Obama’s website, he also plans the following measures related to taxes.
• Eliminate income taxes for any retiree making less than $50,000 per year.
• Obama will restore fairness to the tax code and provide 150 million workers the tax relief they need. Obama will create a new "Making Work Pay" tax credit of up to $500 per person, or $1,000 per working family. The "Making Work Pay" tax credit will completely eliminate income taxes for 10 million Americans.
• Simplify Tax Filings for Middle Class Americans: Obama will dramatically simplify tax filings so that millions of Americans will be able to do their taxes in less than five minutes. Obama will ensure that the IRS uses the information it already gets from banks and employers to give taxpayers the option of pre-filled tax forms to verify, sign and return. Experts estimate that the Obama proposal will save Americans up to 200 million total hours of work and aggravation and up to $2 billion in tax preparer fees.

That is probably enough dry tax related info for now. The non-partisan Tax Policy Center has done a preliminary analysis of both Obama’s and McCain’s tax policies. After I have read all of it, I will provide you with additional information regarding both candidates’ tax plans.