‘Middle-class tax cuts’ and reality in 2008
Dante Chinni
Posted: 06.18.2008 / 9:07 AM PDT
The “who will tax you more” contest has been joined on the presidential battlefield. Both John McCain and Barack Obama have been beating the issue on the campaign trail, talking about tax winners and losers in the next administration.
“Left to their devices, Democrats will impose a massive $100 billion tax hike, almost $700 per taxpayer every year,” Senator McCain says on his website, referring to the Democrats’ plans to allow the Bush administration’s tax cuts to expire in 2010.Not so fast, says Senator Obama’s campaign. The Illinois senator believes in tax cuts, they say, but he wants them to go to the middle class, rather than the wealthy, who receive big benefits from the Bush administration cuts.
Last week the Tax Policy Center, a left-leaning think tank, released its preliminary analysis of the Obama and McCain tax plans and found that both candidates would cut taxes for the vast majority of Americans. Obama’s plan actually offers larger tax cuts for households making less than $112,000 a year, while McCain’s plan offer more breaks for those making above that amount (the top 20 percent of households), according to the analysis. In fact, the nation’s wealthiest – those making $2.9 million and above – would receive a tax cut of more than $269,000 under McCain’s plan and a tax increase of more than $700,000 under Obama’s.
But what do their tax plans mean for most Americans? For that answer, it helps to understand where the middle and ends of the American income ladder are. When CNN recently did a story on that Tax Policy Center analysis, the network reported that the tax cuts for those making $38,000 to $66,000 a year were for the nation’s “low-income folks.”
Not exactly. The median household income in the United States is about $44,000, with half of American households making less than that amount and half making more. That means the majority of households would get more money back from Obama’s plan, based on estimates of the Tax Policy Center. Those with incomes between $38,000 and $66,000 would get $1,042 back under Obama’s plan and $319 from McCain’s.
Helping “middle-class” taxpayers is a common refrain from both candidates on the campaign trail. So when the media misinterpret who is in the middle class, it obscures an important issue for Americans. Consider Patchwork Nation’s community types. The wealthiest type, the “Monied ’Burbs,” rings in with a median household income of about $55,000. That is above the national median, but still low enough to be grouped in with those “low-income folks,” based on the CNN report. (One note: Our figures are based on county averages, not national numbers, and are slightly lower on the top and higher on the bottom – the averaging flattens them out a bit.)
Even the “Monied ’Burb” community, Los Alamos, N.M., has a median household income of about $78,000. That is wealthy by American standards and the highest of all the communities in Patchwork Nation, but still well under the $100,000 mark.
Several factors are to blame for the misunderstanding of what most Americans make. Television likes to show glamorous people living in big houses. Journalists at big news organizations in big cities tend to be on the higher end of the income scale. And when candidates go looking for donation checks they want to tell their “middle-class” audience members that they won’t be the target of a tax hike. Whatever the reasons, the actual income picture is important to keep in mind during the 2008 campaign.
June 18th, 2008 at 11:49 am PDT
Thanks for a much needed clarification.
June 18th, 2008 at 3:15 pm PDT
Exactly…..Your Words My Friend
“Those with incomes between $38,000 and $66,000 would get $1,042 back under Obama’s plan and $319 from McCain’s.”
“Obama’s plan actually offers larger tax cuts for households making less than $112,000 a year, while McCain’s plan offer more breaks for those making above that amount (the top 20 percent of households)”
Also that report showed that about 1/4 of McCains tax break is for those making over 2 million a year……
The people who are in the top tier are not paying the same percentage in taxes as the lower incomes…..not fair…
Obama WILL level the playing field and tax, fairly, the higher income earners like those below them, plus those higher income people can acctually afford to pay higher taxes……Also obama’s plan is most substantial if people make over $250,000/year….so ya, they can afford to pay more in taxes….
its not a penalty, its fairness……
June 18th, 2008 at 8:19 pm PDT
[…] you a minor millionaire? Worried about your future? Don?t worry! McCain is looking out for all those folks making a quarter of a million dollars every year ($250,000…. Of course to do this McCain also needed to reverse his previous outspoken […]
June 19th, 2008 at 10:03 am PDT
Wouldn’t be nice to get the truth from our political candidates? The only fair tax would be a flat tax without deductions or exemptions. Unfortunately without voters putting pressure on their representatives in Congress, taxes will remain a tool to be used for political gain and/or income.
Discrimination is still alive in America. The Democrats are now focusing on wealth as a discriminating factor, and trying very hard to demonize individuals who are trying to live the American dream. Soviet Russia did this too.
June 19th, 2008 at 11:35 am PDT
George you are very correct. No matter what everybody says according to their own situation, the only true fair tax is a flat tax. People say because you have more money you can afford to pay more taxes, but where did that money come from, it came from earning it. So what those people are saying is that even though you earn money just like everyone else, since you do it in a better way, or are more educated and qualified, you get penalized, yes it is a penalty oregon, simply because someone has more money they deserve to get more taken away? Are those people making less somehow better? The answer is no, our tax system is just flawed. And to keep in mind I personally am not in the high tax bracket, so I am not saying this with bias thought
June 19th, 2008 at 11:37 am PDT
I do believe that a key thing to bringing our economy back is to give the middle class something more to work with, that is a fact nobody should deny
June 19th, 2008 at 11:42 am PDT
Raising taxes on the wealthy is a double edged sword in that you raise revenue, but those people are more likely to let go of employees to make up the difference. My neighbor is a small business owner and that is exactly what he did when Clinton raised his taxes. To me there will always be a difference in income between people. Nobody is going to get out of bed early and work a stressful job unless he makes a lot more than the guy flipping burgers.