McCain the Tax Man?

Posted by Michael at 8/29/2008 8:29 PM
Categories: Domestic Issues, Policy Arguments
See, now, this is interesting! This is the kind of stuff I'm talking about!

Prompted by Ari, I investigated some of the tax policies laid forth so far by Obama and McCain. I recognize that these are tentative policy statements and that the guy who wins might do something completely different once he actually gets into office. Nonetheless, these projections are interesting in the meantime because they tell us at least what the candidates think the voters want to hear.

As it turns out, taken at face value, Obama's tax policy doesn't actually increase my tax load by much relative to what it is by now. What's even more interesting is that it appears to be roughly on par with what McCain would tax me. Now, there are additional factors, such as how much Social Security they take from me and how they'll tax things like my house and my investments. But in the end, it ends up being pretty darn close to a wash.

Both plans end up being pretty vanilla party-line policies when it comes to income tax: McCain extends the Bush tax cuts and throws in a new way to compute health insurance costs, whereas Obama promises to screw punish increase taxes on successful productive high-income earners. There's two catches, though. One is that McCain's health care thing is kinda fucked up, and ends up actually slightly hurting people in my income bracket. The other is that Obama's progressive tax scheme is very progressive; it reduces taxes a little bit on people earning low to medium incomes, then it hits individuals earning over $200K (and couples earning over $250K), and it taxes all holy hell out of them. These people end up shouldering over half of the nation's total tax burden.

I am not one of those people or couples. My income is too high to get an Obama tax reduction but too low to get an Obama tax increase. To me, the difference seems to end up being within a few hundred dollars, maybe one or two grand tops. Now, don't get me wrong: Given a choice between paying two grand and not paying two grand, I'd rather, you know, not. But it's not quite enough to make me start going around serial-killing welfare recipients to reduce the economic burden, either.

In fact, such a small margin basically takes the candidates' income tax stances out of play from the point of view of my own personal benefit. What it leaves is a philosophical evaluation rather than a pragmatic one. I strongly dislike the Obama income tax plan because I oppose the idea of forcing any human being to pay, work, or live for another human being, and I utterly refuse to support a candidate whose policies would use the power of government to empower the many to subjugate the few. But I gotta admit, right now it doesn't affect me personally. And maybe in four or eight years it will, but for the time being there's no difference to me.

There is, of course, more to this story.

Where the McCain tax plan really wins is in its treatment of corporate taxes, tariffs, and investment incentives. In other words, while both McCain and Obama want to take the same amount out of my paycheck, McCain wants to take substantially less from my employer as a whole. This would leave more money for my employer to either hire me some help, or just increase my salary. Either way, my life gets a little easier. It also reduces the cost of goods by reducing business overhead, thus increasing my buying power.

So, looking at just income tax alone, my life pretty much doesn't change regardless of whether it's McCain or Obama in the White House. They'll both take essentially the same chunk out of my paycheck. However, when you consider corporate tax policy as well, it becomes clear that, while the chunk they take out stays the same, my paycheck is likely to be bigger under McCain, and I'll be able to buy more with each dollar of it.

Point: McCain.
 
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