Estimate your taxes under McCain or Obama!

Via an email I received alerting me to this nifty little tool I had to share with everyone. It’s developed by a business software company and an accounting professor in Maine which lets you compare your tax rate under a proposed McCain or Obama tax plan. Keep in mind it’s based on their state proposals and policies which will inevitably be watered down by congress and/or never really pass in general, so it’s just for fun.

You can access the tool here: Election Taxes

Some estimates I did earlier:

$35,000 annual income, married filing jointly, with 2 dependents:
35k-taxes.jpg

$100,000 annual income, married filing jointly, with 2 dependents:
100k-taxes.jpg

$250,000 annual income, married filing jointly, with 2 dependents:
250k-taxes.jpg

As you can see, the differences lie in the tax credits and you can see the changes compared to the existing laws.

$1,000,000 annual income, married filing jointly, with 2 dependents:
1mil-taxes.jpg

Once you hit the million mark, Obama’s plan calls for invariably higher taxes than McCain, in line with Obama’s rhetoric on taxing the rich and such.

Report on it from Boston.com:

PORTLAND, Maine—Voters whose bottom line is taxes can use a new online tool to calculate what their own bottom line would be with the IRS under a Barack Obama or John McCain administration.

The model developed by a business software company and an accounting professor in Maine estimates how individual income taxes would be affected under plans put forth by the two presidential candidates.

The Portland-based company Quantrix says taxpayers who log onto http://www.electiontaxes.com and enter their income can obtain a free estimate of what they would pay in taxes for 2009 through 2012 under each of the two presidential candidates.

“The economy is a key factor in this presidential election, and our interactive tool enables individuals to make an informed choice when casting their vote,” said professor Jeffrey Gramlich of the University of Southern Maine. “With just a few keystrokes, this model enables voters to see how these tax plans will impact their personal bottom line.”

McCain and Obama have both vowed to reduce the overall tax load, although the Democrat wants to raise taxes on families making more than $250,000 a year. McCain’s proposals include extending President Bush’s tax cuts, a move Obama opposes.

As they state, these plans change all the time and are totally hypothetical. After playing around with various incomes you can find the minute differences in credits and refunds.

  • Stalin

    I am marginally better under McCain. However, this calculation does not include what effect Obama will have on my business. Higher payroll taxes, capital gains, etc.

  • Dreadsen

    Does it calculate the new Health Care payroll tax McCain is going to add?

  • Dreadsen,

    Not sure, I haven’t checked it out that much. I wouldn’t put too much stock in it since, as Stalin mentioned, their tax plans would have much wider effects than just the individual tax rate. There is much more to be considered.

  • JD

    I’LL BE RICH!!!! I WONT’T HAVE TO WORK ANY MORE!!!!

  • Annette

    It is good to see it in real numbers. There are some questions but overall it shows how it will affect me and my family. Thanks for sharing this with us.

  • OBAMA_SUCKS

    Taxing the rich to give to the poor is socialist. Obama may not tax that much on lower income but dont forget all the taxes he is raising on them through business taxes.

    Nate I am hoping you could get something to show all the taxes Obama is going to increase, to show everyone how bad his tax plan is for our country and economy.

  • Just a Reality Check…

    Remember, it costs money to run a government and run its social services that we want and take for granted. One can’t claim to lower taxes and promise to create new/improved gov’t services at the same time! Also remember, that we are borrowing billions from other nations to fund many of our very expensive gov’t programs (Medicare, Transportation, Defense, Public Education, etc.). The current gov’t bill to buyout our tumbling economy that is currently being discussed in Congress would require tons of support from foreign banks! Its quite hypocritical (actually dangerous) to push other nations around, ignore them, and claim we’re totally free and independent from the international community, while we financially depend on some of them to survive. If China went on the offensive on us, all they would have to do is to reject our gov’t bonds and loans. We’d be broke and that would be the end of the greatest military in the world. If your idea of gov’t is a tax free public service in a capitalist economy then you’ve got some serious issues and need to reconsider your citizenship in the U.S.

  • Dreadsen

    “Taxing the rich to give to the poor is socialist.”

    Well we were socialist in the 60’s because the Rich was taxed over 70% – 90%

    . The highest period of growth in U.S. history 1933-1973 also saw its highest tax rates on the rich: 70 to 91 percent. During this period, the general tax rate climbed as well, but it reached a plateau in 1969, and growth slowed down five years later. Almost all rich nations have higher general taxes than the U.S., and they are growing faster as well.

    Socialist is just a term the right tries to use to scare people out of voting for the left. It’s a false ideology they’ve been using for too many years. When someone thinks of socialist they think of Soviet Union or other dark anti american ideas.
    There is nothing socialist about anything by any logical stretch of the imagination. Social Security, Medicare, Welfare and CORPORATE WELFARE would also put us in the socialist category. And if you agree with that then you need to listen to Ron Paul more because he wants to get rid of all Federal programs and all the money we are sending to all the countries over seas. And the foreign aid dwarfs the amount of money we spend on people here.

  • PeoplePower

    Well, if the tax plans passed exactly as listed, and I find a job making exactly what I was making before, my *income* tax would be affected as follows:

    Under McCain – no change for 2009-10 and a decent gain in 2011-12.

    Under Obama – a small gain for 2009-10 and a better gain (than McCain’s plan) in 2011-12.

    But Stalin, and others, bring up a good point. What *other* costs will go up to cover the costs of a tax cut?

    Of course, I’m going to say something that will rile many of you up…

    I don’t care about receiving a tax break *unless* fiscal responsibility is restored and gaining a few hundred bucks here and there does not add to my (someday, hopefully) children’s debt!

    As “Just a Reality Check” puts it – it costs money to run the government. It costs money to pave the roads and to pay our soldiers’ salary & benefits & veterans’ care. It costs money to have first responders.

    What we *need* more than tax breaks is a measure of tightening our budget and getting rid of garbage earmarks and pork that benefit a few at the expense of the rest.

    Of course, as always, the issue here is what counts as “garbage”? That would be a great discussion item for Nate, Michael and the others to put up on the board. Let’s parse the Federal Budget!! Maybe *we* can solve this crisis… 😉

    Perhaps, phrase it like this – “If you controlled the Federal Budget, how would you pay for everything? Would you add new programs? What would you eliminate?” Etc. etc. We could grab the Federal Budget from the CBO and toy around a bit with it!

  • Todd

    I don’t see that much of a difference for me either way.

    I would pay $ 1079 less under McCain by 2012 and $ $1550 less under Obama, like I said before I new I was just about at the cut off point under Obama’s plan for it to make a big difference compared to Mac’s. And you know that far out the tax rates will change again.

    Dreadsen,

    socialism is when the government takes money from it’s citizens in order to control/run different programs. The example you gave are socialist by definition so how can it be a scare tactic ?

    I do believe what you said about the image American’s get when they hear the word but that would mean they simply don’t know the forms of government..When I hear Russia I think communism not socialism.. Actually I think of France when I think of socialism.

    By the way the more I hear the more I want Ron Paul back, I agree with him completely on his finances

  • Todd, no. This is not socialism. Socialism is a mode of production, particularly describing the equal level of ownership in goods/production. It is not a system of governance.

    Democratic socialisms exist in many places– I would not say France (especially under Sarkozy) would be characterized that way. They have socialist programs, as do we, but there are far better examples than them.

  • Bob

    Isn’t what we are doing with the banks right now socialist?

    I was reading the papers today about a man who couldn’t pay $10 to Blockbuster, and they ruined his credit. The government basically told him “Your mistake, tough!” However, with millionaires who make mistakes, the government bails them out?

  • Dreadsen

    BAB!! ROFL!!!!!

    I agree but you really stooped really low! LOL!!!
    I’ve heard the analogy that a man can’t pay his house mortgage and they say tough but now they are drawing blockbuster late fee parallels!
    We can’t expect the government to bail out folks who don’t pay their blockbuster video late fees!!!

  • STOP THE IGNORANCE

    I actually like PeoplePower’s message. I think that Obama is right for wanting to raise taxes on the rich and cut taxes on the poor. I think he is right for wanting to expand more public programs, but I’m not sayint this becuase I’m a Demecrat or nothing. Infact, I’m not in any party at all. But here is why I think this.

    Right now so many people are out of jobs and have no health care. Many can’t afford it and there are alot of children who have no coverage at all. The bar on public assitance right now is set so low that if you do qualify for assitance you can’t live from day to day. Many elderly do get cut from medicaid programs and can’t get insurance coverage because they have “pre-existing” conditions. Now take this into condisderation. If so many people can’t get coverage then so many people won’t go to the doctor to get help. If these people don’t go when they are sick then there is a very real risk to anyone [rich or poor] to catch something that could’ve been prevented had they [the individual without coverage] been able to get help.

    As far as raising taxes on businesses. I do understand that whatever extra a business has to pay, chances are will roll down to the consumer. But I would rather they tax the business because that way I could choose to pay or not. If they tax me I have no choice. Case and point…If they raise taxes on a shoe store it’s my perogative to pay the higher price for the shoes or not.

    I feel that the only way for the America to get back on track is to go back to basics. This country use to support itself and produce things that other countries wanted. Money stayed flowing into the US as income not as credit. Now we outsource everything. Most of our businesses now are service type not straight up manufacturing. Then to top it off we constantly get things from other countries that we can build here ourselves. I get that it’s cheaper over there, but that wouldn’t matter if people here had jobs and more money to spend.

    Our educational system is failing. I love sports and entertainment, but when they can get that much money to entertain and yet our schools turn out dropouts instead of graduates, I have a problem with that. When colleges are next to impossible to get into not becuase of ones grades, but because of the amount of debt it carries with it, I have a problem with that. American values have deteriorated and unless we own up to that and stop pointing fingers at party lines then we might as well consider today as the good ol’ days cause it is going to get much worse.

    Also, I HATE BANKS!!!! I have money in bank now, but they are “evil”. There has to be new rules on how they can give out credit but also how they can charge people for keeping money in the bank, or 50 cent overdrafts to be charged 30+ dollars. I’m not sure what the ramifications would be if they just let the bank go down. Infact what I keep hearing is about what intrests other countries have in our bank. I’m tired of the U.S. protecting other country’s intrests over our own.

    So if anyone can tell me, what would it mean if they don’t bail out Wall Street?

  • PeoplePower

    Stop the Ignorance – I recently spoke to a financial advisor about the current situation, while I was discussing my options to rollover my 401K (recently laid off, need to get it out of my former company’s control).

    He agreed with the things I had been hearing on CSPAN.

    The situation seems to be about financial institutions holding mortgage-backed securities. These “investments” have plusses and minuses, but have become incredibly risky w/the housing crisis. They also have lost any discernible value, so they can’t be openly traded or purchased, so they sit in the financial institutions holdings, simply consuming capital to use.

    Some of these are valuable holdings, as most Americans are still paying their mortgages, but some of them are not. Since they can’t put a solid figure on their value, they freeze assets.

    With these financial institutions having frozen assets, they have less capital to spread around. If they tighten up their lending practices, everything will slow down. The small businesses seeking loans to expand will have harder times doing so. People looking to buy big-ticket items (cars, houses, etc.) will not be able to get loans to do so. Spending will drop dramatically, and every sector of the economy will suffer for lack of growth.

    If the government swoops in and buys up these mortgage-backed securities, they will establish a “going rate” for them simply by buying them. Additionally, they will free up capital for these institutions to return to money-lending practices.

    If the economy doesn’t completely tank, despite this move, the long-run gain will be that the securities the government purchased will have solid value and likely will be a money gainer for the government.

    Now, I’m not certain of several things:
    1. Is this an exhaggeration of the situation, such that an imminent collapse is hyperbole?
    2. Will credit drying up truly impact purchasing power, as a lot of people will continue to buy smaller items?
    3. How can we be certain that the mortgage-backed securities being purchased do not benefit only a handful of institutions vs. an across-the-board benefit?
    4. If these are such difficult-to-value securities, is this really a money-losing proposition?
    5. If the economy tanks anyway, the government (and tax payers) are now on the hook for debt that won’t go up in value for an extremely long time, if ever, and we’ll effectively double-pay this cost.

    I am still not entirely convinced that this is a necessary move, but I am not an expert. I trust that enough of the Senators on the various Finance committees would be raising huge red flags if this weren’t entirely an issue.

    Then again, Congress has been snowed before by this Administration. There may very well be some ulterior motives afoot…

  • STOP THE IGNORANCE

    First, thank you PeoplePower for the explaination. I think I got the idea. I wasn’t formally into all the politi-nancial stuff. [smile] However, I do know that there are alot of holdups in determining how to go about things and I think it’s becuase there are alot of serious risks and no one trusts the Bush Administration. Personally, there is no way our entire economy is resting on a couple of banks as I see it. If that is so, then it goes back to conspiracy theory. Alot would be lost, but doing what the goverment is suggesting now is no different from when a person uses one credit card to pay off another. When something goes wrong there are no more cards to get you out of the rutt, and that is where I’m concerned. If things dropped now then other banking institutions would be able to buy up lost assets and prevent the economy from completely tanking, or so I would think. Let me know if this train of thought is wrong, but I just don’t want us to be in a worse off situation than we already are. Parts of the United States have been literaly sold off to foreign nations, some we aren’t even sure we like. I don’t want this country to go from the United States of America to China-ran-istan if you get my drift.

    On another not all this who’s lying and who’s not is getting on my nerves so here is a link. Check it out, infact check out the entire site.

    http://www.factcheck.org/elections-2008/the_whoppers_of_2008.html

  • Stalin

    I’ve skimmed a few of these posts but something that you might want to keep in mind:

    You give a politician a dollar and he’ll spend two. We all know that roads, bridges, defense, are all things that the government must collect taxes to provide. However, the government spends our money like a child that was just given an Amex card. Until they show me that they have the restraint and discipline to spend MY money responsibly I will fight most forms of taxation tooth and nail.

  • Leverage

    The reason the fed is able to take on 700B in debt while banks cannot manage is a combination of leverage and liquidity requirements. Banks are highly leveraged institutions, meaning for every dollar in real capital they may be lending as many as 20. When a loan becomes nonperforming, it then decreases the available capital the bank has to lend by a factor of 20 due to reserve requirements. This greatly reduces the banks ability to operate as a business and generate income. As more of these loans become nonperforming, banks become insolvent and cannot lend anything at all, making their value essentially zero even though the majority of their loans still have value. The fed is not subject to such liquidity restrictions (a nice perk of making the rules) so they can buy this debt and hold it until maturity. With 95% of the loans still performing, losses, if any, will be a fraction of the 700B number.

    It’s really a matter of immense pain now, or softening the blow in the coming years. By letting these banks fail, the leverage we have accumulated over the last 6 years will be unwound at once, and millions of people will be literally bankrupt. Businesses will go bankrupt with no access to capital, and the entire economy will grind to a halt. I tend to agree with most free market economics principals, but if these institutions are allowed to fail then every single person will feel the effects as credit becomes impossible to obtain and costs of everyday goods skyrocket.

    The “fat cats” on wall street screwed up, yes, but they don’t let idiots run Lehman Brothers and Goldman. Greedy, perhaps, but just as greedy as the 35K per year laborer who bought a plasma tv and a boat with the 50K he all-of-a-sudden had in a HELOC. If consumers spent only realized gains (ie money from actually selling a house) instead of unrealized ones (lines of credit against home equity) we wouldn’t be in this mess. It’s like taking a line of credit against a well performing stock portfolio, is that insane to anyone else?

    To make a long story short, it is important to understand the implications of not intervening before forming an opinion on the matter. I am all for fiscal conservatism, but that requires being conservative with spending, not setting a record deficit every quarter. At the same time, it’s pretty hard to tax revenue that is never generated because there is no liquidity in the economy….

  • O_S said “Taxing the rich to give to the poor is socialist”

    So what is taxing the poor to give to the rich called?

  • Todd

    Pudding are you poor ? (I ain’t trying to get into your personal life) but I don’t think you in that bad of shape for some reason.

    It’s like the Obama supporter I work with (still haven’t figured out how we haven’t strangled one another and have maintained our good friendship). In the last 4 years, which I believe were under Bush he has bought a house, gotten 3 raises, bought a new 27,000 car and has had 2 kids—he says Bush has killed our ability to progress through life—What ?

  • Well said “Levreage”. That should get everyone thinking more and talking less on this Blog. Bravo….

  • Todd

    Socialism (per dictionary.com)

    1. a theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole.

    taxes are taken from the people and used to direct different programs. Social Security, Medicare and now AIG, FANNIE AND FREDDY

  • No Todd I’m not poor, I’m not rich either, I do OK and I’d qualify (if I lived in the US) to be part of Obama’s 95% of the county who’d get a tax cut.

  • nlc1

    The links for the $35K couple and the $100K couple got mixed up.

  • Leo

    STOPTHEIGNORANCE,
    Increasing taxation on business and not the individual will raise prices of all goods offered by all competing companies. You will eventually need shoes and you will pay more for them when you do. You will also need clothes, food, toiletries, and so on. That feeling of choice isn’t lost on politicians which is why campaigns often vilify “big business”. Perhaps you may instead favor a tax only on luxury items like TVs, cell phones, and boats or taxes on excessive usage of utilities. An owner of a large 5,000 square foot home should pay the same per gallon or kilowatt hour until they exceed the average household usage (that determination a whole new argument) then the rate increases.

  • Leonardo DiCrapio

    Obama is giving 95% of Americans a “refundable” tax credit. 40% of Americans don’t pay any income taxes today (and most of them get a “rebate” check from Uncle Sam). Obama’s plan would result in turning millions more Americans from tax payers to “rebate” check receivers. So, instead of 40% of Americans not paying any income taxes, the number would go up to 45%, 50%, or more. This is classic redistribution of wealth when you would have roughly half the population paying taxes and roughly half the population “rebate” (welfare) checks, which are really just redistributed wealth from the taxpayers.