Independent analyses of the presidential candidates’ tax proposals show that those who make less than $250,000 a year would not see their taxes raised under Senator Barack Obama’s plans. Further, Mr. Obama would generally cut taxes more than Senator John McCain would for households with incomes less than $100,000 a year.
Mr. McCain would cut taxes generally on par with Mr. Obama for those making $100,000 to $250,000 a year, the analyses found, but those making $250,000 a year and above would typically pay less in taxes under Mr. McCain.
The analyses were conducted independently by the nonpartisan Tax Policy Center, a joint venture of the Urban Institute and the Brookings Institution, and Deloitte, the accounting giant, at the request of The New York Times.
Mr. McCain has been sounding the traditional Republican tax-cutting theme, trying to convince voters that Mr. Obama, the Democratic nominee, wants to increase taxes and spread the wealth like a socialist.
Helped by the emergence of Joe the Plumber and using Mr. Obama’s own words, Mr. McCain has insisted that Mr. Obama’s tax policies would hurt small businesses and upwardly mobile individuals, while providing welfare for low-income Americans.
Mr. Obama has been fighting those accusations in stump speeches and commercials, in recent days asking members of his audience to raise their hands if they made less than $250,000 a year. Fewer than 3 percent of households make more than $250,000.
But the tax proposals are complicated, and tax bills are affected by personal variables. Analysts at the Tax Policy Center and Deloitte tried to explain the ramifications of the candidates’ plans by applying their tax policies to various situations.
Roberton Williams, principal research associate at the Tax Policy Center, said the analysis found that: “On the average, people with income below $100,000 would get more from Obama than from McCain. From $100,000 to $250,000, they’d be fairly even under Obama and McCain. For those over $250,000, Obama increases taxes.”
Mr. McCain’s plan includes extending President Bush’s income-tax cuts and doubling exemptions for dependent children to $7,000 by 2016. He would also give a refundable tax credit to households that buy health insurance and would impose taxes on employer-provided coverage.
Mr. Obama opposes extending President Bush’s tax cuts. Instead, he proposes various tax breaks, including a $500 tax credit for each person in a household who works, a larger child care tax credit, a $4,000 tax credit each year for the first two years of college, and eliminating all income taxes for those over 65 with income less than $50,000 a year.
To reduce the deficit and inequality, he would raise the tax rate for single households with incomes of $200,000 or more and for families with incomes over $250,000. He would also raise taxes on capital gains and dividends.
The median household income nationwide is $50,233, according to the Census Bureau. The Tax Policy Center found that, for married couples with incomes of $50,000, two children and both parents working, income taxes would be cut by $284 more under Mr. Obama’s plan — by $1,005, compared with $721 under Mr. McCain’s plan.
Deloitte also examined such a couple and found similar benefits; a $700 cut under Mr. McCain’s plan and $1,000 under Mr. Obama’s.
For married couples with incomes of $500,000 with two children and both parents working, the Tax Policy Center found that Mr. Obama would raise income taxes by $3,363, from $110,955 now, while Mr. McCain’s plans would leave taxes unchanged. Deloitte found that a $500,000-a-year couple would pay $3,100 more under Mr. Obama, with no change under Mr. McCain.
Clint Stretch, Deloitte’s managing principal of tax policy, said most families would benefit under Mr. McCain’s plan because of an increased exemption for each child. That, he said, would reduce taxes for low-income families by about $230 per child and for high-income families by about $800.
To help low-income families in particular, Mr. Obama would give a “Making Work Pay Credit” equal to 6.2 percent of a worker’s first $8,100 in wages. That would yield a tax credit of $500 for a single person, and $1,000 for a couple in which both adults work. As a result, a low-income couple now paying no income taxes might receive a $1,000 refund.
But Mr. McCain has told audiences that Mr. Obama’s “plan gives away your tax dollars to those who don’t pay taxes. That’s not a tax cut, that’s welfare.”
Mr. Obama responded last week in Kansas City, Mo.: “McCain is so out of touch with the struggles you are facing that he must be the first politician in history to call a tax cut for working people welfare.”
Mr. Obama wants to eliminate income taxes for people over age 65 who earn less than $50,000 a year. So under his plan, a single person that age with income of $50,000 would experience a $2,339 tax cut, according to the Tax Policy Center. Under Mr. McCain’s plans, that person’s taxes would remain unchanged.
“What Obama’s doing,” said Mr. Stretch of Deloitte, “is he’s taking more money from people like me, and spending it on exemptions for the elderly and on tax credits for education.”
But Mr. Stretch added, “When Obama says he cuts taxes for every working family under $150,000, I’d say that’s true.”
A single head of household with one child and $15,000 in income now receives a tax refund of $3,859, largely because of the earned income tax credit, according to the Tax Policy Center. That refund would increase by $500 under Mr. Obama’s plan. Under Mr. McCain’s plan there would be no change for that taxpayer.
According to Deloitte’s calculations, a single taxpayer who earns $35,000 a year and has no children would get a $500 tax cut under Mr. Obama’s plan — to $3,000 a year from the current $3,500. Mr. McCain would leave that person’s taxes unchanged.
Mr. McCain also proposes giving many households a $5,000 tax credit when they buy family health insurance, which costs $12,000 nationwide on average. But households would for the first time have to pay taxes on employer-provided insurance.
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