McCain v. Obama on the Economy: Who Will Be Better for Your Personal Finances? Taxes Edition

Last week, I mentioned that I would be doing a series on the economic policies of presumptive presidential candidates, John McCain and Barack Obama. This year, we could really see an impact in personal finances, depending on who wins (and whether he has the support of Congress).

Also, over at Main Street Financing Challenges, Sam Thacker is addressing what the presidential candidates are saying about what they will do for small business.

Today, we will look at what McCain and Obama each propose in terms of taxes.

John McCain and taxes:

McCain would keep the taxes in 2001 and 2003 in place. Remember that at the time, McCain said that the taxes would primarily benefit the wealthy. If this is true, then the middle class would not benefit much from this move. McCain also says that he would lower the corporate tax rate.

Interestingly, McCain has proposed a two-rate tax system. It would be simpler, he claims, and taxpayers could choose which to file under. I suppose this is nice, since you could figure out which would most benefit you and pay under that code. Of course, that means having to do your taxes twice.

***Update on John McCain Tax Plan: 6-10-08*** John McCain recently expounded on his ideas of tax relief for the middle class. He says he will get rid of the alternative minimum tax, and that he will double the size of the child tax exemption. These moves are likely to be of great benefit to the middle class. He also plans to keep the estate tax low.

Barack Obama and taxes:

Barack Obama says he will keep current tax breaks in place for every except those that make more than $250,000. Obama has also said he will cut taxes further for the middle class. I like this idea because, right now, it is mainly the middle class that has the largest burden. The wealthy have special tax cuts (and the money to pay accountants to find additional loopholes) and the poor do not pay taxes and some still receive a "return."

Capital gains taxes would be increased under Barack Obama, probably to something around 20% or 25%.

Additionally, he would raise the estate tax so that maximum is 55% (something that would be paid by the wealthiest).

***Update on Barack Obama Tax Plan: 6-11-08*** Obama plans to exempt seniors that make under $50,000 a year from income taxes. Additionally, tax credit of $500 per working person (or $1,000 per family) would offset Social Security taxes on the first $8,100 of earnings. EIC would be expanded, and there would be a federal match (50%) on on the first $1,000 of savings for families making less than $75,000 per year.

Take a look at your financial situation. If you are out of the middle class, John McCain's ideas on taxes will probably benefit you the most. If you are middle class, making between $40,000 and $250,000 a year (that's a wide middle class, I know), Barack Obama's ideas on taxes would probably be of most benefit to you.

Tags: McCain economy, Obama economy, personal finances, John McCain taxes, Barack Obama taxes, capital gains tax, middle class