Friday, September 12, 2008

Truth and Taxes: I Want My $12

Often when I discuss the presidential race with friends and family, someone will say "Obama is going to raise your taxes."

That is certainly a popular perception, fueled by the McCain campaign and its surrogates. Unfortunately, it is at best seriously misleading and at worst an outright fabrication. 

Here are the facts. 

According to the non-partisan Tax Policy Center, Obama's plan would reduce the average tax bill for Americans making less than $227,000 annually. His plan provides bigger breaks than does McCain's for those earning less than $112,000 per year and smaller reductions than McCain's for those making $112,000-$227,000 -- but reductions nonetheless. Obama would raise taxes on anyone making more than $227,000. But, significantly, his tax hikes are overwhelmingly targeted at those with annual incomes of more than $603,000. 

In fact, the average tax bill for those with incomes between $227,000 and $603,000 annually would rise by just $12 under Obama's plan. McCain would cut taxes by an average of $7,871 for this group. A good summary of the data can be found in a recent CNN/Money article. You also can read the full Tax Policy Center report here

So, in summary, if you make more than $603,000 a year, yes, Obama will raise your taxes significantly. If you make less than that, odds are Obama will cut your taxes, in many cases more than McCain would. 

If you make less than $603K but more than $227K, you'll have to fork over to Uncle Sam twelve bucks more than you do today — about a quarter of a tank of gas. If this scares you, then don't watch this video:




I don't have all the data in front of me but I'm pretty confident that the vast, vast majority of American voters earn substantially less than $603,000 a year (for an informal straw poll see the right-hand column of this page). So blanket statements that "Obama will raise your taxes" are both false and irresponsible. 

As citizens we certainly can evaluate and discuss the relative merits of various tax policies. Some favor cutting aggressively across the board, which naturally yields bigger aggregate tax reductions for those whose incomes are highest. Supporters of this stance typically argue that reducing taxes in such a way best stimulates economic growth by providing incentives to work harder, start businesses, create jobs, etc. Others believe in tax policy that skews benefits to lower-income workers, believing it a necessary check against capitalism's tendency toward unequal wealth distribution. 

Regardless of what you believe and support, our debates and decisions must be based on facts, not misinformation. 

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