McCain vs. Obama: Who's Better for Taxes?

The following commentary is from the September issue of the Forbes Growth Investor:

The stock market was open for trading last month, but as a former track & field athlete, I have to admit that the Olympics monopolized my attention. Usain Bolt was magnificent, as was the entire contingent of Jamaican sprinters. With a population of just 2.8 million, this small island country managed to win 11 medals on the track—six of them gold.

During the commercials, however, I did notice that stocks were rallying. In fact, the S&P 500 gained 1.22% in August. This is better than it did every month so far this year except for April. At least some of August’s rally was due to the 3.3% preliminary GDP figure for the second quarter, which was announced on August 28. This number was much better than expected and significantly better than the 1.9% advance figure reported a month earlier. Because the preliminary figure is based on more complete data, investors can have more confidence in it. Although overall growth was certainly robust, it came primarily from importing fewer goods and services and exporting more. It turns out the weak dollar is having a much bigger impact on international trade than almost anyone expected. I hope Barack Obama is listening.

Personal consumption expenditures were also very strong in the second quarter. Unfortunately, this is not likely to be repeated during the third quarter because the tax rebate checks have been fully disbursed. Some economists are already calling for another stimulus package. You can put me in that camp. However, tax rebates won’t do the trick. Their impact is just temporary. Tax cuts are the way to go if you really want to boost the economy in a long-lasting manner.

Speaking of taxes, here is something to ponder. Is it possible that taxes could actually go higher in a McCain administration than in an Obama one? That certainly does not sound logical. After all, Obama has been threatening to raise taxes while McCain has been calling for tax cuts. Yet a Congress controlled by Democrats is not likely to help a president McCain reduce taxes. Instead, under McCain, Congress could very well let the Bush tax cuts expire, in effect, giving us a significant tax increase. However, with Obama in the White House, Congress will almost certainly deliver a package of tax hikes. Yet this option could be less onerous than an outright expiration of the Bush tax cuts. “You’re next stop: The Twilight Zone!”

Stocks also may have responded to the latest S&P/Case-Shiller figures on housing prices. As I discussed in last month’s issue, a bottoming out process is underway. Housing prices are still falling at an accelerating rate, but the rate of acceleration is beginning to stabilize. Because the Case-Shiller figures are delayed by almost two months, we could actually learn in October that August was not so bad. Furthermore, we have already seen an uptick in mortgage applications. Yet despite marginally better news in the housing market, Fannie Mae and Freddie Mac continue to get crushed. There is even talk that these mortgage giants will be restructured and equity investors will be wiped out completely. However, if these government sponsored entities survive, those who have the guts to buy now could eventually find themselves sitting on huge gains.

While this is a distinct possibility, it is a much better bet that an American relay team will drop the baton in the next major track meet.

Comments

[User 52172:]

you numbnut obama is going to give tax breaks for mid income family and if he takes some more money from obscene profits of oil companies it is still going to be beneficial to you. are you just watching fox news and larry kudlow on cnbc or what?

2008 Sep 04 02:33 AM

[MarvinMBA:]

I personally believe it is going to be impossible to predict the next taxing cycle regardless of who is in the White House. The present Administration has made us all poor and the country poorer. Any tax increase is going to hurt....but in order to pay back the excesses of this administration its going to be on our backs no matter who gets in. Why reward the party in power for where we are today by electing a continuation of old policy is my only comment...its up to you to decide if you want more of the same or not.

2008 Sep 04 02:35 AM

[dlaw:]

If by "better on taxes" you mean "will borrow and spend vastly more money", then McCain is your guy, obviously.

The problem is that people like the ones who read this site refuse to hold the Republicans accountable for their insane level of borrowing and spending. Apparently, all the Republicans have to do is tell you they won't raise taxes and they can spend as much money as they want and you won't say a thing. They just pat your little heads and tell you to go back to sleep and dream your "libertarian" dreams.

The Republican Congress and the Republican Administration raised DOMESTIC DISCRETIONARY spending faster than the Johnson Administration, and guess what - it wasn't an accident. And John McCain signed onto a few of those budgets, now didn't he. Hmm.

2008 Sep 04 02:39 AM

[User 52172:]

current republican party has proven the notion that republicans are somehow mysteriously better at managing economy is a myth. even if Mcain is saying what he is supposed to say to win. it is hilarious when the main argument of republican candidate is i m an idiot i say bomb bomb bomb i say drill drill drill see see i m just an idiot like u and a great american so vote for me. and man alive there are idiots who will go and vote for him. he is prostituting himself by doing things he was against before his run for election.

the days are over for republican party to proclaim that it is a business friendly party because in last 8 years it has just screwed up everything one possibly can not just because of questionable judgement and baseless arguments for war and other policies but also sheer incompetence demonstrated in execution. most incompetent extremist people have hijacked the party just like that idiot osama has hijacked faith.

2008 Sep 04 02:49 AM

[Smalltownba...:]

We are no where near a bottom in housing prices. Mortgage applications in real numbers are at a 17 year low, adjusted for population growth you don't want to think about those numbers would look like. MBA is forecasting 20% lower numbers in 2009. Democrats and Republicans alike are responsible. Once we begin to see the impact of the decline in revenues caused by this downturn you are likely to see the highest tax rates in the history of this nation if we do not learn how to stop spending at the government and the individual household level.

States and local municipalities are already seeing these impacts. The Federal Government is not disclosing their figures and when they do they will likely be bogus. Regardles of who we elect and what they say the only way out is to stop spending money we do not have, cut programs beginning with entitlements. We need someone who will wield the knife like Governor Sonny Purdue has in Georgia. If it isn't there you are not allowed to spend it.

2008 Sep 04 09:33 AM

[Tom B:]

Hey man, I 'm a professional. I worked 15 years at the same job, and then got laid off TWICE under Bush. I don't think it's unfair to blame Bush's economy, because I think in a healthy economy, this wouldn't have happened. I COULD be spending money now, stimulating GDP. I WANT to spend money. But I can't. The middle class is suffering and the GOP doesn't even admit to a recession.

2008 Sep 04 09:54 AM

[mediapro:]

To summarize the majority of these posts: It's not so much how you tax, it's how you spend and borrow? Clinton used to call his spending on education and social support programs "investments". If we could quantify how expenditures relate to later benefits, this might be a logical way to look at revenue.

Personally, I like the way Obama focuses on one area of investment. He's proposing to tax oil and remove subsidies to invest $150 billion in alternatives. Since last time I looked oil companies were sitting on more than 350 existing off-shore leases that aren't producing one drop of new oil, banking their windfall profits and subsidies for "drilling" on those leases, and plowing money back into the company and, admittedly, dividends to investors. I'll give investing a shot over this rather tired trickle-down approach we've been sucking on for the last 28 years.

2008 Sep 04 03:47 PM

[Steven Hansen:]

i am no rocket scientist but with the drop in income from the corporate world and the 5% who pay most of the taxes - where pray tell does the money come from??? we are screwed because whoever we elect will have no power against a congress who has no concept of good economic policy.

2008 Sep 05 12:13 AM

[limitout:]

mccain runnin around my brain, they say mccain's for horses not for men, they say it's gonna kill me but they won't say when,mccain runnin around my brain

2008 Sep 05 03:00 AM

[Kath Saden:]

Voters need to think about how Obama is going to help the economy grow and keep all of the assistance to the lower class families and cut taxes as well. He talks about lower taxes for everyone but if he plans on offering other ways to help lower and middle class there is no way he will be able to do so with the flow of tax money behind those different ways to assist people. That means no welfare, no medicaid, and food stamps. Those are the things that are going to be affected. But no one seems to be telling those less fortunate and less educated that they will not have that type of assistance when Obama makes tax cuts.
Furthermore, check this clash videos I found yesterday about the US Presidential candidates have talked taxes. Well, it’s entitled Obama v. McCain on Taxes. Watch these statements - then vote in clashorama.com/index.p...

2008 Sep 17 06:21 PM

[MSTRANS:]

I have posted in the past to both McCain and Obama in June. I wrote them about this, here’s a quick recap.

1. We all what not just more jobs but better paying jobs.
2. We all want energy independence.
3. We need to fix our Medicare, medical and social security.
all in a one shot plan for both sides.

Dems and Reps agree to open and drill for more oil with a revote to continue drilling in 10years.
We built warships in record months and oil rigs can be done as well.

The US oil & gas is the taxpayers, don't let the energy companies take full profits. Put a 2, 7 or 9% profit per barrel force to go towards alternate energy projects, and I mean the ones that work all ready.

Building Energy Infrastructures’** High speed rails to over lay or next to existing RR tracks for close metro to metro cities, most the airports and sea ports are already have tracks in place.

Let the RR & Airline companies invests in them also with the Government project. This creates good paying jobs. This also declines trucking goods from sea ports to close metro areas. Declines airline fuels Example: Atlanta to Augusta [air 3hrs, check in to check out] [car 2.5hrs] but high speed rail projects can take about 1 hr.

Purpose of above: reduce oil base fuels, even the MORE Nuclear projects would power those lines and reduce dirty power plants.
JUST think if Americans reduced gasoline by 9% use in one year from 2007-2008.

If that puts Americans to work with actual long term weekly pay checks to put food on the table then a one time kick back check after tax season.

In about 2-3 years the less oil consumption by US travel, transport and vacations. NOW SELL OFF ANY unneeded oil production to other countries and THOSE Profits get put back into Social Security, Medicare, and Medical needs.

So even in ten years if each state had 1 to 3 projects, it puts Americans to work, then OUR oil product can be sold over seas, We make a cleaner America, we have money being put back into retirements that should never have been touch from either party in the past.

If the US starts now,
1 Nuclear plant time 7-9 years
500 miles high speed track 3-4 years depends on how its done
our own refineries time "I have now idea how long yet"
... go ahead add a few more
Airports and Ship ports think of going to an airport terminal and catching a plane OR Train (security checkins) airports don't lose their passengers, they just by modified to a cleaner transportation.

Just think are you going to take a one a year tax season kick back, or would you rather see your tax money be spent on projects that have good paying jobs, and those Projects CREATE profit from them, AND then you sell off the dirty fuel profit to put back into where it belonged in the first place.

Then all said and done vote shut down the rigs for a rain day if ever need again, hopefully not!.

So it is your choice, a yearly tax credit kick back that is coming out of some other US taxpayers Pocket, OR make jobs that give us OUR INDEPENDANCE and bring back the American dream like in the great Hoover dam projects, or nasa.

but the only one who has been on some track of this is McCain, Obama has said we can't drill out way out, but would tax the last American owned Company Exxon right out of the US. YOU can not TAX the Apple Farmer to Get more Apples from him, YOU NEED TO grow more trees.

For Obama, "We can not just tax our way out of this one either!!!!!!!!!!!!!"

2008 Oct 12 08:57 PM