Democratic presidential candidate Sen. Barack Obama, D.-Ill., outlined his tax proposals in a speech at the Tax Policy Center in Washington, highlighted by a proposal for a tax cut of between $80 billion and $85 billion, coupled with increases in the capital gains tax.
"When the changes in our economy are leaving too many people behind, the competitiveness of our country risks falling behind," he said.
Obama's tax plan includes a "Making Work Pay" tax credit of up to $500 per person and $1,000 per family for 150 million workers and their families. The tax credit would completely eliminate income taxes for 10 million workers. It would also provide relief to self-employed small business owners.
He also proposed a tax cut for homeowners who do not itemize their deductions. Obama would create a new universal mortgage interest credit for low and middle-income homeowners. The 10 percent credit would benefit an estimated 10 million homeowners. Non-itemizers would be eligible for the credit, which would provide the average recipient with approximately $500 per year in tax savings.
Obama would also eliminate income taxes for senior citizens making less than $50,000 per year. He estimated that would allow nearly 7 million senior citizens to save roughly $1,400 per year.
Obama also said he would push for tax simplification to allow millions of taxpayers to complete their returns in less than five minutes. The Internal Revenue Service would use the financial information it receives from employers and banks to provide taxpayers with pre-filled forms that taxpayers could verify, sign and return to the IRS online. He estimates this would save Americans up to 200 million total hours of work and up to $2 billion in tax preparer fees. Obama would also eliminate capital gains taxes on startup businesses and reduce the self-employment tax for small businesses.
To pay for his plan, Obama plans to eliminate loopholes and deductions for the oil and gas industry, and limit the ability of large multinational companies and individuals to use overseas tax havens. Obama also plans to increase the highest bracket for capital gains and dividends, and eliminate the carried interest loophole.
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