Taxes as a primary issue

One of the issues that is bandied about a lot in this political season are "tax cuts" - everyone wants tax cuts, everyone thinks they pay too much tax. However, everyone I talk to seems to think that the Republicans will always do better than the democrats -- I suppose that's true, if you're in the top 4% or so of earners. Otherwise, the myth of the middle-class-tax-cut by the Republicans is just that - a myth. Most voters believe that Obama will "raise their taxes", which is more a nod to the success of the Republican campaign to paint it that way, than any real numbers. In fact, for nearly everyone I have talked to about taxes, they are not sure or are misinformed about what the impact really is.

Now this is not a complete picture - we're talking only about SS and income taxes, but CNN Money did a very clear analysis of what a 2009 tax bill would be for each income bracket, if either Obama's plan or McCain's plan were implemented. (Note that this assumes the whole shebang - which is probably unlikely in either case).

In general, if you make > 150K household income, your bill will be lower under McCain's plan. If you make less than that -- like 95% of the country -- then Obama's plan will be better for you.

                    MCCAIN                OBAMA
Income             Avg. tax bill     Avg. tax bill
Over $2.9M      -$269,364         +$701,885
$603K and up    -$45,361          +$115,974
$227K-$603K  -$7,871               +$12
$161K-$227K     -$4,380               -$2,789
$112K-$161K     -$2,614               -$2,204
$66K-$112K      -$1,009               -$1,290
$38K-$66K       -$319                 -$1,042
$19K-$38K       -$113                 -$892
Under $19K      -$19                  -$567

The summary of the tax plans is usually explained as:

McCain: The average taxpayer in every income group would see a lower tax bill, but high-income taxpayers would benefit more than everyone else.

Obama: High-income taxpayers would pay more in taxes, while everyone else's tax bill would be reduced. Those who benefit the most - in terms of reducing their taxes as a percentage of after-tax income - are in the lowest income groups.

The data is supported By the Tax Policy Center research -- a long, detailed analysis of the proposed plans. It's well worth a read and is probably far more detailed than most people would need, but it is the best source I've found so far for unbiased information. I'm still not entirely sure I understand all the details!

But let's also keep in mind that McCain plans to end the largest tax break that affects every working American -- he proposes to remove the exemption for health insurance (currently paid for with pre-tax dollars for over 60 million workers) and apply income tax to that amount.

In general, though, those of us over the cutoff point are likely to see a tax increase (really the revocation or non-renewal of the Bush tax cuts, if I understand correctly) back to the levels before 2000, and those in the lower tax brackets will see a cut. The bunch of people who are comfortable and making 100K-ish, are probably more in the gray area- maybe better, maybe worse, depending on the rest of the pictures (dependents, etc).