Tag: Archive

October 16, 2008 12:37 PM | Permalink |

One of the most passionate, and most confused, debates taking place during this election season is the debate over federal tax policy. Both presidential candidates, Barack Obama and John McCain, are proposing large tax cuts that would reduce federal revenues that are needed to fully fund public services. But the tax plan proposed by Senator Obama is far less expensive, and far more of the benefits are directed towards lowand middle-income people.

Citizens for Tax Justice has estimated the effects of the tax plans of each candidate. The nearby table includes figures for 2012, a year in which most of the provisions in both candidates’ tax plans would be fully in effect.

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October 16, 2008 12:35 PM | Permalink |

During a campaign stop earlier this week, presidential candidate Barack Obama answered a question about taxes put to him by Joe Wurzelbacher, an Ohio plumber who hopes to buy the business that he currently works for. Senator Obama has proposed to allow the Bush income tax cuts to expire for those married couples with adjusted gross income (AGI) above $250,000 and singles with AGI above $200,000. Mr. Wurzelbacher told Obama that, if he succeeds in obtaining the business, his income might exceed $250,000 and that Obama’s tax proposal could stand in his way of achieving the American Dream.

Senator Obama told Mr. Wurzelbacher, as well as those watching the final presidential debate when this question was brought up, that people like him need a tax break during those years when they are working towards the American Dream rather than during the years after they have already achieved it.

In other words, Obama proposes tax cuts for people like Mr. Wurzelbacher during the years when their income has not yet reached $250,000 rather than in the years after their income exceeds that level. Senator Obama’s tax plan would likely give the plumber who is earning perhaps $60,000 or less a year (and saving as much as he can) lower taxes compared to current law and compared to what he would have to pay under Senator McCain’s tax plan. We estimate that only 2.3 percent of taxpayers will be above the $250,000/$200,000 AGI threshold this year, meaning Obama would extend the Bush income tax cuts, and enact several new tax cuts, for all but the richest 2.3 percent. We are not convinced that new tax cuts for over 97 percent of taxpayers would help working America as much as other policy options, but at least Senator Obama makes a logical argument as to why any new tax cuts should be targeted to those who are not among the very rich.

In any event, even if Mr. Wurzelbacher earns $280,000, as he says he hopes to do, he’ll still get a substantial income tax cut under Obama’s tax program. That’s because Obama proposes to extend the Bush reductions in the bottom four tax brackets, which are the rates that apply to almost all of Mr. Wurzelbacher’s taxable income. To be sure, McCain wants to give Mr. Wurzelbacher an even bigger tax cut, but that would save him at most only $900 a year.’

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October 15, 2008 12:39 PM | Permalink |

Americans are in no mood to subsidize the well-off or Wall Street. Presidential candidate John McCain has proposed expanding a massive tax loophole that does both.

The tax loophole for capital gains subsidizes people whose income comes from investments rather than wages, as well as the Wall Street brokers who depend on their business. Senator McCain proposes to increase this loophole by lowering the top income tax rate on capital gains for 2009 and 2010 to a super-low 7.5 percent. Over three fourths of the benefits would go to the richest one percent of taxpayers in 2009, as illustrated in the nearby table.

McCain also proposes to allow taxpayers to count $15,000 worth of capital losses against their other income to lower their income tax liability for 2008 and 2009. (The current limit is $3,000.)

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October 1, 2008 02:47 PM | Permalink |

Americans are in no mood to subsidize Wall Street. This became clear Monday, when the House of Representatives rejected the financial rescue plan that was supported by leaders from both parties as well as the President. Reasonable people can differ on whether the government should step in to prop up the financial system right now. There are progressives and conservatives on both sides of that issue. But what seems indisputable is that Wall Street has mismanaged its affairs and Americans are in no mood to pay for its mistakes.

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September 12, 2008 12:41 PM | Permalink |

Presidential candidate John McCain’s campaign is running ads that say Senator Obama proposes “painful tax increases on working American families.” Senator McCain lately has been telling Americans that “Senator Obama will raise your taxes.” These statements show either a proud ignorance or a willful dishonesty.

Citizens for Tax Justice (CTJ) does not think that new tax cuts will improve the lives of ordinary Americans, but we do feel that the public should receive accurate information about the tax cuts both candidates are offering. We respectfully ask that Senator McCain act honorably and avoid attempts to mislead the public about his opponent’s positions.

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July 31, 2008 02:51 PM | Permalink |

A recent Wall Street Journal editorial1 touts new figures from the IRS2 as evidence that the rich are actually paying a higher share of federal taxes under President Bush and that the tax code has, therefore, become more progressive over the past eight years.

The Journal uses the IRS figures to create the impression that the poorer half of Americans are contributing almost nothing to federal revenue while the wealthy are providing the bulk of it. The figures illustrate that, for example, the richest one percent of taxpayers paid almost 40 percent of federal income taxes in 2006, up from almost 34 percent in 2001. Meanwhile, the poorest 50 percent paid only about 3 percent, down from about 4 percent in 2001.

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July 18, 2008 12:45 PM | Permalink |

Carly Fiorina, a surrogate for the presidential campaign of Senator John McCain, recently said that under the tax plan of McCain’s opponent, Senator Barack Obama, “23 million small businesses will see their taxes raised” because “23 million small businesses file their income tax as individuals.”

Senator Obama has promised that, if elected, he will allow the Bush tax cuts for people in the top two tax brackets to expire (as current law already provides).1 According to the U.S. Treasury Department, only 1.4 million taxpayers will be in the top two tax brackets this year.

Although it’s impossible to determine how many of those 1.4 million taxpayers are smallbusiness owners,2 two things are crystal clear: It’s a lot less than all of them, and it’s certainly not 23 million.

“John McCain has admitted that economics is not his strong suit,” noted Robert S. McIntyre, director of Citizens for Tax Justice. “Apparently, he and his surrogates don’t even grasp basic arithmetic.”

Fiorina previously achieved notoriety as head of Hewlett-Packard, where she spearheaded HP’s 2002 merger with Compaq Computer. That merger, which led to Fiorina’s firing, turned out to be one of the biggest corporate follies since Dick Cheney, as head of Halliburton, asbestos company in 1998, a deal that subsequently cost Halliburton billions of dollars to settle hundreds of thousands of medical-injury claims.

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July 7, 2008 03:58 PM | Permalink |

Presidential candidate Senator Barack Obama has proposed increasing the Social Security payroll tax on wealthy Americans to enhance the program’s solvency for years to come. While several commentators and politicians have suggested that this would burden the middle-class, only around 1 percent of taxpayers would actually be affected by this proposal.

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July 7, 2008 02:16 PM | Permalink |

Representative Paul Ryan (R-Wisc.), the ranking Republican on the House Budget Committee, introduced legislation on May 21 that would cut Social Security benefits and create private accounts, end Medicare as it is currently structured, dramatically reduce the revenues available to fund federal public services, and radically reduce the fairness and revenue sufficiency of the federal tax system.

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July 2, 2008 01:43 PM | Permalink |

In the past month, lawmakers beholden to the oil industry blocked consideration of a bill (S. 3044) that would shift tax subsidies away from oil and gas companies to alternative energy investments. This legislation also included a windfall profits tax on oil companies.

If Congress wants to raise revenue to encourage the development of alternative energy, it makes sense to start, as this bill would, by closing the tax loopholes that favor oil and gas companies. These loopholes in effect provide a subsidy to oil and gas companies that other firms do not receive.

Many of these subsidies have existed for years and have surely helped boost the profits of oil company shareholders. As this paper explains, the American public has received little, if anything, in return. Congress can recoup some of the benefits showered on the oil and gas industry over the years by implementing a windfall profits tax.

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