In 1976 I cast my first vote in a presidential election — choosing incumbent Gerald Ford over the peanut farmer from Plains, Ga. Back then, I knew or cared little about taxes and tax policies, as the meager income I accrued during my college years required little more than the short form. If the IRS had had something on the order of a “very short form,” I probably could have used that.But I’ve learned one or two things since then, and one of them is to be a bit skeptical about tax policy pronouncements uttered during the frenzy of an election year.
In the 2008 election, the often-uncomfortable subject of taxes and tax reform has, in essence, defined the platforms of this year’s trio of White House hopefuls. The stark reality is that whatever policy issue they favor, whether health care, job creation et al., is inarguably rooted in tax policy. And thus far, none of them have exactly been forthcoming about the degree to which they would have to raise taxes, either to help fund the programs they want, or on a more basic level, to balance the budget.
As November inches closer, I urge you, if you haven’t already, to spend some time on the candidates’ Web sites. Navigate past the obligatory contributions banner, click on the bar labeled “Issues” and scroll down. This is where it becomes interesting.
Barack Obama pledges to restore “fairness” to the Tax Code, while creating a new “Making Work Pay” tax credit of up to $500 per person, or $1,000 per working family. This apparently will eliminate income taxes for 10 million Americans. And he promises to “dramatically” simplify tax filings so that millions of Americans will be able to do their taxes in less than five minutes with pre-filled forms.
I can just imagine the enthusiastic response he would receive from tax prep industry.
Meanwhile, Hillary Clinton wants to lower taxes for middle-class families by extending middle-class tax cuts, including a child tax credit and marriage penalty relief, offering new tax cuts for health care, college and retirement, and expanding the Earned Income Tax Credit and the child care tax credit. She also speaks about creating “high wage” jobs of the 21st century. Whatever her definition of high-wage jobs is, it’s a concept that will likely remain on paper without some form of broad tax hikes.
John McCain thus far is the only candidate whose Web site mentions the repeal of the Alternative Minimum Tax, which he claims will save middle class families nearly $60 billion in one year. It’s not really clear how he intends to make up for the revenue, but at least he broaches the subject.
Of greater concern to me was his unfamiliarity with the capital gains tax, and his desire for lower rates. He was quoted as saying that lower rates were important for working people who have 401(k) plans. The reality is that 401(k)s are taxed at ordinary income tax rates, not those reserved for capital gains.
Regardless of who wins six months from now, it promises to be a taxing experience for us.
And that’s with a capital “T.”
