The economic visions of the presidential candidates in 2008 are dramatically different, and the contrast is most striking when they discuss taxation. Barack Obama will steal from the pages of English folklore and take from the rich to give to the poor; well, actually, to the middle class, who will benefit from major tax cuts. John McCain sees things differently, and he will cut taxes across the board - most heavily in the highest income bracket, who will see more than $250,000 pumped back into their wallets. (Editor's note: This figure has been corrected from its original version on 9/1/08.)
The data above, compiled by a nonpartisan policy group in Washington DC, doesn’t take into account Obama’s plans to change the capital gains tax - and he’s been quoted saying that he’ll hike it as much as 20%, or 25%, from the current 15%. That would hit the rich hard, too - but conservatives are concerned it would have much broader implications on the nation’s economic health by discouraging investment in the stock markets.
But the money to pay for Obama’s ambitious agenda has to come from somewhere - $75 million in tax cuts, $15 billion in renewable energy spending over 10 years, and a proposed infrastructure reinvestment bank will be expensive. Obama even seems to be tacking to the center on military spending, indicating an eagerness to pursue the conflict in Afghanistan while he sticks to his antiwar roots by advocating an end to a U.S. military presence in Iraq.
The presidential hopeful will need every bit of the extra money from America’s richest taxpayers to finance his “change” agenda - especially if, as expected, the Democrats continue to hold Congress, and he can carry momentum into his first term to pass a liberal slate of legislation not seen in America since the activist ’60s.
McCain, meanwhile, will take a very different approach. If he holds form, he’ll bring in new sources of oil to ease the upward pressure on oil and gas prices, and he’ll help consumers in all income brackets by lowering taxes. His economic platform is remarkably light on proposed programs, however, and a conservative, status quo approach to fiscal governance seems to be his method. It remains to be seen what Commander in Chief McCain would do at the head of the U.S. Army, though - and whether the cost of conflicts in Iraq, Afghanistan, or Iran would make it impossible for him to follow through on plans to lighten the load on American taxpayers. Either way, he’ll focus on stimulating business, and he disagrees sharply with Obama on capital gains reform, energy reinvestment, and the housing crisis, arguing that these should be left to private market forces, not government intervention.
If you’d like to read more about the economics of the 2008 Election, here’s a couple of links:
It will be interesting to see how these platforms evolve as the election season closes, and these ideas in their nascent stages could be of lasting importance if the eventual President can pass his proposals through Congress. And investors, taxpayers, and Americans should watch carefully for the election’s effect on their country, and their wallet.