Thursday, June 19, 2008

What's the Tax Plan Mr. President-in-Waiting

Category: Estate and Inheritance Tax, Tax Law and Planning

Now that the candidates are known, what is that next question? What they propose to do with your taxes of course. A quick summary rundown courtesy of National Center for Policy Analysis - YOUR TAX BILL: HOW MCCAIN, OBAMA DIFFER:

Income taxes:

  • McCain wants to make permanent the current federal income-tax rates.

  • McCain opposes Sen. Obama's plan to lift the earnings cap on the Social Security payroll tax, saying such a move would be bad news for the economy.

  • Obama wants to raise the top ordinary income-tax rate from 35 percent to 39.6 percent on families making more than $250,000 a year.

  • Obama's plan includes increased taxes not only on ordinary income such as salary but also on capital gains and most corporate dividends.

  • Obama also plans to impose higher Social Security taxes on workers making over $250,000.

Investment income:

  • McCain wants to keep the current structure of tax rates on capital gains and

  • Obama wants to raise the long-term capital-gains rate for families making more than $250,000 from its current rate of 15 percent to around 20 percent, or even higher.

Estate taxes:

  • Neither candidate wants to kill the estate tax permanently, as President
    Bush has proposed.

  • Under current law, the federal estate-tax exemption this year is $2 million, and the top rate is 45 percent; in 2009 that exclusion is set to rise to $3.5 million, with the rate remaining at 45 percent.

  • McCain proposes raising the exclusion to $5 million and cutting the tax rate to 15 percent.

  • Obama proposes a $3.5 million exclusion while keeping the top rate at 45 percent.


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