Thompson & McCarty, P.C. CPA

What Do The Presidential Candidates Have In Mind On Taxation

Regardless of who we elect for President there is no question that the President elect will have a significant impact on taxes. The tax cuts that President Bush signed into law will lapse in 2011. That includes the income tax rate reductions (we are all paying less tax than we were), estate tax relief (my personal pet peeve of a bad tax – it's double taxation at its worst) and the lower rate on long term capital gains and dividends (a provision that encourages investment and wealth accumulation). I think that we need to make these permanent but the issue is what the candidates think.

Individual Taxes: Obama and Clinton would raise taxes on high incomers, probably those over $250,000 but nobody know their exact definition. Clinton wants the 39.6% top rate reinstated. She and Obama would preserve Bush's tax cuts for other taxpayers. McCain says that he'll fight to keep the lower rates for all filers. McCain would keep the 15% maximum rate on dividends and capital gains. Clinton would allow the top rate on gains to 20%. Obama wants a rate near 25% and both would tax dividends as ordinary income.

The Alternative Minimum Tax (AMT): This is the tax that is broken and should repealed as I have recently written on my web site. McCain supports repealing the tax. Clinton and Obama would keep the AMT from affecting the middle class filers (again we don't know their definition of middle class) but Obama says that he'd increase taxes elsewhere to make up for the lost revenue. That is lost revenue from people that were never supposed to be hit with AMT tax to begin with. BULL CRAP is what it is and note that I am being nice.

Estate Tax: Currently we have a $2 million exemption which is set to rise to $3.5 million in 2009. Clinton wants to retain that figure for future years. McCain want to increase the exemption to $10 million and cut the top rate to 15%. Obama opposes repealing the tax but hasn't given any details on his plan.

Corporate taxes: I will preface this by saying that corporations do not pay income taxes people do. Let me explain myself. Taxes that corporations pay don't come out of their profits, they come from our pocket in the form of higher prices for our goods and services. So, don't buy into the corporate tax bull it is just another way to separate you and your money. McCain want to lower the 35% top rate to 25%. Clinton and Obama both oppose tax rate cuts for corporations and would increase revenues by closing “loopholes” used by oil and gas firms. Do you think when they do that your price won't increase for gasoline?

Health Care: Clinton would limit the current the current tax exclusion of employer provided coverage for upper incomers and would give credits to low income earners to buy insurance. McCain would eliminate the exclusion for everyone and replace it with a credit of up to $5000 to buy coverage. Too bad that most insurance cost more than that. Obama would tax employers that don't offer meaningful coverage to workers. Those businesses will pass those cost on to you too. It is a recurring theme with taxes. They are always paid by the people. DON'T BE BLINDED BY THE RHETORIC!

Huckaby wants to abolish the current tax system. Don't get too excited. He wants a flat tax of 30%. In reality he is finished anyway so don't sweat it.