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Thread: 4 candidates, your paycheck

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    Default 4 candidates, your paycheck

    4 candidates, your paycheck
    How the leading Democratic and Republican presidential candidates' tax proposals could affect your take-home pay.

    NEW YORK (CNNMoney.com) -- Regardless of how much money you make, you have skin in this game.

    The four leading presidential candidates say they're concerned about the taxes that Americans pay out of their paychecks. And they all vow to do something about it if elected.

    Now with the economy at the forefront of the presidential campaign, the leading candidates' tax proposals will come under increasing scrutiny in the coming weeks.

    Here's a look at some of the ways that Hillary Clinton, Barack Obama, John McCain and Mitt Romney would realign tax policies and how those changes could affect your take-home pay.

    Keeping the tax cuts in place

    One of the central questions is what to do about a series of tax cuts passed in 2001 and 2003 set to expire in three years.

    The four candidates seem to agree on one thing: They want to preserve the cuts for low- and middle-income earners. Those tax cuts include lower rates, reduced taxes paid by married couples and a higher standard deduction.

    But the Democratic and Republican candidates part company when it comes to upper-income earners.

    Both McCain and Romney have said they would preserve the tax cuts for high-income earners - typically defined as households that make $250,000 or more. Clinton and Obama want to repeal them for taxpayers in that group.

    Clinton also would reduce the value of some personal exemptions and itemized deductions for big earners.

    Part of the rationale given for restoring higher taxes on upper-income households is that they benefited the most from the 2001 and 2003 tax cuts, and that continuation of the tax cuts for those at the top of the heap may force the government to raise taxes on everyone else or cut spending.

    Those who oppose taxing the rich more note that the top 1% - taxpayers making more than $250,000 - already account for 40% of all federal income tax revenue. Taxing them more, proponents of extending the tax cuts say, may lower tax receipts because high-income filers will seek more ways to shelter their money from taxes.

    New tax breaks

    The candidates also have somewhat different ideas about what kind of new income tax breaks to offer.

    On the Republican side, Romney has said he wants to permanently lower the rate on the lowest tax bracket to 7.5% from 10%. Currently that tax bracket applies to roughly the first $8,000 for single filers and the first $16,000 for married couples filing jointly.

    And he has proposed permanently exempting workers over 65 from having to pay payroll taxes, which are used to fund Social Security.

    McCain hasn't yet offered up any individual income tax breaks beyond proposing to make the 2001 and 2003 breaks permanent.

    On the Democratic side, Obama would offer a tax break to seniors by eliminating their income taxes if they make less than $50,000.

    Obama also would create a credit worth up to $500 per working person ($1,000 per family) to offset Social Security tax on the first $8,100 of earnings. The credit would start to phase out for people with incomes between $150,000 and $200,000.

    Both he and Clinton have said they want to expand the earned income tax credit for low-income workers. And they want to offer an expanded saver's tax credit although in somewhat different ways.

    Clinton would offer a savers' credit equal to 100% on the first $1,000 saved by married couples making less than $60,000, and a 50% matching credit for couples making between $60,000 and $100,000.

    Obama would match 50 percent of the first $1,000 of savings for families that earn under $75,000.

    New retirement tax bites

    The candidates' tax proposals aren't all sugar. There are notable differences, for instance, in how they would might treat payroll taxes in a bid to shore up Social Security over the long haul.

    Obama would consider increasing the amount of wages subject to the payroll tax. Currently, the first $102,000 of wage income is subject to the 12.4% tax, half of which is paid by workers and half by their employers.

    Obama has indicated he might favor lifting that cap but only after imposing a "donut." A donut would protect from the payroll tax a certain portion of wages above the current cap - for instance, wages between $102,000 and $202,000. But any earnings above that ceiling would be taxed.

    It's not clear yet whether a payroll tax increase would be in the offing under Clinton or McCain, because both candidates have been spare on details.

    Clinton has said she doesn't want to eliminate the cap on the income subject to the Social Security tax. But that doesn't necessarily rule out an increase in that cap or a higher tax rate.

    McCain, meanwhile, has said he would prefer Social Security funding to be shored up by reducing growth in benefits rather than by raising the payroll tax.

    Romney doesn't want to raise payroll taxes, but instead favors the idea of letting workers have individual investment accounts and fund them with money from the surplus paid into the system.

    Clinton and Obama oppose the notion of diverting payroll taxes - whether from the system's surplus or direct from your paycheck - to fund accounts.

    Don't rearrange your budget yet

    Of course, campaign promises are often easier to make than they are to keep. A lot can come between a newly elected president and his or her ideas about taxes.

    Political reality, for one. Just look at President Bush and Congress. Their inability to come to agreement has stymied decisions.

    Then there's deficit reality. The budget that Bush submitted Monday projects a deficit of more than $400 billion. That could tie the hands of the next president to make tax changes.

    Or consider the Alternative Minimum Tax (AMT). Everyone in Washington says they want to do something about the outmoded tax scheme, which was originally aimed at the rich but is increasingly hitting the middle class. But no one has an appealing way to pay for fixing it. The price tag for reform or repeal ranges between $500 billion and $1 trillion over 10 years.

    "No one has really staked out a credible claim at fiscal responsibility," said Len Burman, director of the Tax Policy Center. "They'd just devote deficits to different purposes." To top of page
    Q: Senator Obama, would you take the same pledge? No tax increases on people under $250,000?

    OBAMA: I not only have pledged not to raise their taxes, I've been the first candidate in this race to specifically say I would cut their taxes.

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    For me Obama will give me the largest tax decrease and Clinton the largest tax increase.
    The order for my wallet:
    1)Obama
    2)Romney
    3)McCain
    4)Clinton
    Q: Senator Obama, would you take the same pledge? No tax increases on people under $250,000?

    OBAMA: I not only have pledged not to raise their taxes, I've been the first candidate in this race to specifically say I would cut their taxes.

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    Makes little difference to me. I can lose my paycheck anytime and still be fine.
    It is just easy money so I keep doing it.

    I have longer term issues with our economy, the war, and such.
    Last edited by uscitizen; 02-05-2008 at 11:45 AM.
    Bush doubled the debt from 5 trillion to 10 trillion.
    Proving tax cuts work!

    Bush asked for and signed for the TARP money.
    The Republican senate leader backed Bush on this.

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    its just interesting to note based on the details how the media calls obama the more liberal when he has a firm understanding, coming from a big city like Chicago and not some poor crappy city like hillary, where the middle class sits on the income scale.
    Q: Senator Obama, would you take the same pledge? No tax increases on people under $250,000?

    OBAMA: I not only have pledged not to raise their taxes, I've been the first candidate in this race to specifically say I would cut their taxes.

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    Romney gives us the best result... then Obama. If all things remain equal. (ie if we aren't suddenly getting money taken out to pay for a medicaire scheme we don't need).
    Excellence is an art won by training and habituation. We do not act rightly because we have virtue or excellence, but rather we have those because we have acted rightly. We are what we repeatedly do. Excellence, then, is not an act but a habit.
    - -- Aristotle

    Believe nothing on the faith of traditions, even though they have been held in honor for many generations and in diverse places. Do not believe a thing because many people speak of it. Do not believe on the faith of the sages of the past. Do not believe what you yourself have imagined, persuading yourself that a God inspires you. Believe nothing on the sole authority of your masters and priests. After examination, believe what you yourself have tested and found to be reasonable, and conform your conduct thereto.
    - -- The Buddha

    It is the mark of an educated mind to be able to entertain a thought without accepting it.
    - -- Aristotle

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