There is so much confusion floating around that it’s time for a fact-based discussion about the key issues in this upcoming election. I’m going to create individual posts on key issues that impact us all. The source for the following 2 quotes (in italics) is the Reuters news agency.
McCain would make permanent all provisions of these cuts, which are due to expire at the end of 2010, other than the repeal of the estate tax. He would make the estate tax permanent with the first $5 million exempted and a 15 percent rate on inheritance amounts above that level.
Obama would make permanent select provisions, including expanded child tax credits and the 10-, 15-, 25- and 28-percent tax rate brackets. He would allow the top two rates of 36 and 39.6 percent to return to their levels before the Bush tax cuts. He proposes to make the estate tax permanent with a $3.5 million exemption and a 45 percent rate.
What does this mean with respect to income taxes? Obama is going to increase the tax rate for the 2 highest income tax brackets–the group that can probably best afford to absorb a tax increase. Obama is not going to raise income taxes for any other group. McCain wants the status quo–he’s in favor of no change.
If you have earn a high taxable income, you’ll do better with McCain. If your income puts you in a middle-income tax bracket (where the vast majority of Americans are in terms of income), you’ll not see an increase in your income taxes and your taxes could even see a decrease if you have dependent children under the Obama plan.
When the Republicans say that all Obama wants to do is raise “your taxes,” they neglect to mention that this is only for those with taxable incomes in the 2 highest tax brackets. [Note: You don’t think the 2 highest income tax brackets are limited only for Republicans do you?]
What does this mean with respect to estate taxes? If you are really wealthy and have an estate worth more than $3.5 million at the time of your death, the tax rate will be 45% for each dollar over $3.5 million. McCain only proposes 15% of the amount over $5 million, a significantly lower tax rate than Obama. How many estates are there in the U.S. with a value of $3.5 million? Not that many. To be fair however, not all wealth exists in the form of cash assets so the Obama plan could be a hardship for some. I can imagine some large ranches for example that might have to be sold in whole or in part to pay taxes. Life insurance could always be obtained to pay the taxes. Knowing what to expect with respect to the tax rules allows one to plan ahead.
I hope this provides you with some insight you need about the 2 candidates. Democrat Dave