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How Much Tax Will You Pay Under A New President?

As the election heats up there is a lot of focus on which potential President will raise taxes.  McCain say Obama will raise taxes – Obama admits he will raise taxes on the rich, but versus the McCain plan will lower taxes for the middle class.  One could argue that given the fact our country is going broke we probably all need to pay more taxes, but according to the Tax Policy Center here is how the candidates really compare:

If you make        you would save under Obama          under McCain

 

Less than $19,000                $567                                      $21

$19,000 – $36,600               $892                                      $118

$36,600 – $66,400               $1118                                     $325

$66,400 – $111,600             $1264                                     $994

$111,600 – $161,000           $2135                                     $2584

$161,000 – $227,000           $2796                                     $4437

So the clear fact is that if you make less than $111,600 per year (as most of America does), and you vote strictly based on which candidate will hit you with the lowest taxes (or on the surface what appears to be the lowest taxes), then you should vote for Obama.  However, wealthier Americans only concerned with Federal taxes will clearly like McCain more.  Take a look at how the tax rates compare if you are among the top 5% of earners in the US:

If you make                      pay more under Obama       save under McCain

$227,000 – $603,400             $121                                          $8159

$603,400 – $2.87 million       $93,709                                     $48,862

More than $2.87 million         $542,882                                    $290,708

So, if you make $1 million a year, under Obama your taxes will increase as much as $94,000, but under McCain you will get a tax break of $48,000.  This is all very confusing to me, as McCain’s supposed base – the straight-talking heartland of America – typically does not make huge amounts of money, so financially you would assume they would be in Obama’s camp.  They are also justifiably upset by greedy Wall Street “big wigs” – the people that make millions per year and tank our economy.  But these are the folks that would benefit most by a McCain Presidency.

Personally if Obama wins my taxes go up.  But I agree with an earlier post by Ray Link that there is more to making money than the tax rate.  The value of my investments has plummeted under an administration that believes in little or no regulation and tiny tax rates for the rich.  I’m hopeful that by paying more in taxes my asset base will grow, and I will sleep a little better at night.

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