McCain vs. Obama - Economics 101

[TheMercenary]

An interesting perspective from The Economist.

The battle of the pockets is joined
Jun 12th 2008 | WASHINGTON, DC
From The Economist print edition

The candidates' tax and spending plans are examined

THE most recent unemployment figures have hit Washington like a brick: the unemployment rate jumped to 5.5% in May, a hefty half-point hike from April. Much of the rise came from young Americans unsuccessfully seeking work for the first time, but the capital is again buzzing with recession worries. What better time, therefore, for the two presumptive nominees to battle over their economic plans?

And battle they have. On June 9th Barack Obama began a two-week tour to battlefield states, his first as his party's anointed leader, with a big speech on economic policy. He accused John McCain of favouring George Bush-like profligacy by proposing tax cuts he can't pay for. Mr McCain shot back with a speech of his own next day, saying that Mr Obama will raise taxes and unwisely renegotiate trade agreements. Strangely, both of them may have a point.


During the primary campaign Mr Obama decried exporting jobs to China and getting tainted medicine in return, with scarcely a mention for America's booming export sector (though his tone on trade is already starting to soften a bit.) And he does want to raise taxes on high-earning Americans to pay for new spending on health care and helping poor people save. Mr Obama wants to raise the top income-tax rate from 35% to 39.6%—its pre-Bush level—and the tax on capital gains to perhaps 25% from 15%. Mr Obama also wants to add some new corporate taxes. And he has spoken repeatedly of removing the earnings cap on payroll taxes, which, along with his other proposals, would increase the top marginal tax rate to over 46% of earned income. (State income taxes, which range from 0% in Texas and half a dozen others to around 9% in the most expensive states, including California, New Jersey and Washington, DC, come on top of that.) But his campaign, filled with centrist academic economists, has not proposed specifics, and Mr Obama said this week that he might even defer some of his tax hikes depending on economic conditions when he takes office.

continues:

http://www.economist.com/world/na/di...ry_id=11551769

[BigV]

What's your take, mercy?

[TheMercenary]

Either way, we are fucked.

[lookout123]

Mr Obama wants to raise the top income-tax rate from 35% to 39.6%—its pre-Bush level—and the tax on capital gains to perhaps 25% from 15%. Mr Obama also wants to add some new corporate taxes. And he has spoken repeatedly of removing the earnings cap on payroll taxes, which, along with his other proposals, would increase the top marginal tax rate to over 46% of earned income. (State income taxes, which range from 0% in Texas and half a dozen others to around 9% in the most expensive states, including California, New Jersey and Washington, DC, come on top of that.)

That right there is enough for me to applaud if he should catch a bullet in the back of the head. Raising taxes on the most productive Americans is not a great way to stimulate economic growth. Raising taxes on corporations only results in costs being passed on to consumers. Taxing capital gains at higher levels only motivates investors to find newer and better tax dodges. With the 15% cap on capital gains taxes investors have been more willing to move money, thus triggering the tax in the first place.

[deadbeater]

Raise taxes? Raise taxes?! They were on the same level before the Paris Hilton/Warren Buffett tax cuts! How in the blue hell can that be considered a rise in taxes??

[lookout123]

deadbeater, could you explain to me what these Paris Hilton/Warren Buffett tax cuts are?

oh and to be fair, I will answer your question. If taxes are set at X and then are changed to X + Y, then that qualifies as an increase. basic math.

[TheMercenary]

Further, deadbeater, please explain to me how many, as a percent of income, that different income brackets pay into the current tax system.

[classicman]

I'm interested in more opinions in this thread. I am getting more unsettled as we get closer to the election. Seems like the "Change" mantra has been followed by the question "How?" I'm not sensing any clear productive answers though. Perhaps thats why the race is a dead heat at this point.

[richlevy]

Originally Posted by deadbeater

Raise taxes? Raise taxes?! They were on the same level before the Paris Hilton/Warren Buffett tax cuts! How in the blue hell can that be considered a rise in taxes??

We can call it a re-raise, or, if you're into poker a 'check raise'.

I think a lot of Americans are fed up with the 'trickle down' theory of economics that states if you take the brakes off taxing the wealthy, the money saved will 'trickle down' to the middle and lower income sector.

My guess is that unless you work in a yacht factory or are an undocumented alien, this will not affect your job prospects, at least not enough to justify the lost tax revenue that will either fall on you or get put on the national credit card.

[xoxoxoBruce]

My guess is that unless you work in a yacht factory or are an undocumented alien, this will not affect your job prospects...

Don't forget the shiny shoe whore investment guys.

[xoxoxoBruce]

umm

[TheMercenary]

Obama still has not fully explained the details of how he is going to pay for all these things he has promised. Esp the part of how he is going to pay for health care for all the illegal aliens. With what?

[lookout123]

your money.

[TheMercenary]

Originally Posted by lookout123

your money.

Yea, that's what I am worried about. I just may not be worth it to work so hard.

[lookout123]

if you're giving up 40 to 50 cents on the dollar there comes a certain point where you stop and think... "is there something I'd rather be doing right now?"