After months of speculation, the field is finally set. The US presidential race is down to Republican candidate John McCain and Democratic candidate Barrack Obama. Both will spend the next five months talking about the issues important to the American people. Tops on their list? The economy.
The tax plans for McCain and Obama could not be more different. Here’s a brief rundown of where they stand:
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McCain plans to make most Bush tax cuts of 2001 and 2003 permanent.
Rather than eliminate the federal estate tax, he proposes raises the personal exemption from $1 million to $5 million (the current system increases the exemption to $3.5 million but it will sunset to $1 million in 2011).
In contrast, McCain plans to eliminate the Alternative Minimum Tax (AMT) altogether.
McCain would also introduce an alternative two-rate income tax code that claims would simplify the system. Taxpayers would choose which code to use.
McCain would raise the limits on tax rates, which would shift taxpayers from the 28% rate to 15%.
McCain would reduce the corporate tax rate and close corporate tax loopholes. He estimates that the latter would save taxpayers $151.7 billion over five years.
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Obama would keep the Bush tax cuts for all but those earning more than $250,000, a group that Obama refers to as the wealthiest 1% of Americans.
Obama would push for more tax cuts for the middle class resulting in about $1000 per family. He would introduce a homeowner’s credit for those taxpayers who do not itemize. Seniors making less than $50,000 would be exempt from tax under Obama’s proposal.
Obama is also eying an increase in the capital gains tax rates. He has discussed increases to between 20 and 28% – from the current 10 to 20% range.
Simplification of the tax code is also a priority. Among his suggestions are pre-printed tax forms with wage information already included.
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