How Each Candidate Will Impact Your Bottom Line

The economy has taken a back seat to no other issue this election year, and for good reason. The unemployment rate is increasing and more layoffs are imminent, energy prices have had a huge impact on disposable income, foreclosures are at an all time high, the stock market has seen significant declines, and inflation has reared its ugly head again.

Amid abundant fear and uncertainty, one thing is certain: this election is too important for us to rely on political rhetoric. Our country desires and deserves more. Whether you’re on the fence or not, looking at the facts can go a long way toward providing clarity. To save you the time and frustration, we’ve researched how each candidate’s policies will affect your bottom line. No bias here, we’ve simply dug out the hard numbers as given from each campaign on all of the issues that will affect your financial well being.

Taxes

Obama: Obama claims that no family making less than $250,000 will see their taxes increase and that 95% of Americans would see a decrease in taxes in the form of a refundable credit of $500 per working person ($1,000 per married working couple). Those making more than $250,000 would see their tax rates return to 1990’s era levels (39.6%). Obama offers a tax calculator on his site.

McCain: McCain would keep the top tax rate at 35 percent and make permanent all previous Bush administration tax cuts. McCain would provide a progressively higher tax break to those who earn more, with the highest 20% of wage earners seeing the largest increase in take home income. Additionally, he would double the dependent exemption from $3,500 to $7,000 for those with incomes of less than $50,000.

Energy Expenses

Obama: Obama wants to institute a windfall profits tax on oil companies to give tax filers a $1,000 rebate to assist in the coverage of energy expenses.

McCain: Proposes that Congress suspend the 18.4 cent tax on gasoline and 24.4 cent tax on diesel between Memorial and Labor Day.

College Loans and Expenses

Obama: Proposes to increase Pell Grants from the limit of $4,050 to $5,100. Also would issue a $4,000 annual credit that can be used towards college tuition in exchange for community service.
McCain: Does not propose any new grants or tax benefits for those seeking higher education.

Home Ownership

Obama: Proposes creating a ‘universal mortgage credit’ of 10% to assist the two-thirds of U.S. homeowners who do not itemize their taxes (and as a result do not get mortgage credits). Obama’s campaign claims that the average recipient would receive approximately $500 from this credit.

McCain: Would allow holders of a sub-prime mortgage that was taken post 2005 to refinance to a new 30 year fixed-rate mortgage if they are delinquent or able to prove that they will not be able to pay their existing loan.

Health Care

Obama: Under Obama’s plan, if you like your health insurance, you need not change anything. If you don’t like your plan, or don’t have health insurance, you are guaranteed eligibility at no premium for a plan that is similar to that which is offered through the Federal Employees Health Benefits Program (FEHBP), which members of Congress use. This plan would cover preventative, maternity, mental health, and other services.

McCain: Under McCain’s plan, if you have employee sponsored health insurance, your benefits would now be treated as taxable income. To help offset this tax gain, McCain proposes a $5,000 refundable tax credit for families and $2,500 for individuals.

Investing & Retirement

Obama: Obama plans to raise the capital gains tax on investment profits from the current 15% maximum to 20% for those making over $250,000. Those earning under $250,000 would see no change. On the issue of taxing estates, Obama would raise the exclusion to $3.5 million per person and keep the taxable rate above that at 45%.

McCain: No change in the 15% maximum capital gains tax. When it comes to taxing estates, McCain would raise the exclusion to $5 million per person, while cutting the tax rate on transfers above that amount to 15%.

Job Creation

Obama: Obama’s largest focus is on creating new clean energy jobs. He proposes dedicating $150 billion over the next 10 years towards alternative energy technology and industry in an effort to create 5 million new jobs. The second major area of focus for job creation by the Obama campaign is to double the funding for the Manufacturing Extension Partnership (MEP) in order to maintain a strong manufacturing presence in the US. A third effort would be to create a National Infrastructure Reinvestment Bank that would receive $60 billion over 10 years in order to help finance the rebuilding of infrastructure which would hopefully lead to the creation of 2 million new jobs.

McCain: The crux of McCain’s job creation policy is to cut the corporate tax rate from 35 to 25% (whereas Obama advocates for keeping it at 35%). McCain plans on applying $2 billion per year towards developing clean coal technology. He’d also like to create 45 new nuclear plants by 2030, but does not dictate a specific amount towards this initiative.

For further research, visit:
The Tax Policy Center
Factcheck.org
Project Vote Smart
Barackobama.com
Johnmccain.com

May the best candidate win next Tuesday. Get out and vote!

For more of GE Miller’s writing, see 20somethingfinance.com