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Obama's tax proposals-Mostly Fiction! Obama’s Tax Proposals- Mostly Fiction! Summary of eRumor: A forward email that lists what it says are Barack Obama’s tax proposals if he were elected president. The Truth: This eRumor is a recycled version of one that circulated in March, 2008, about both Barack Obama and Hillary Clinton. It resurfaced as an Obama eRumor in July, 2008. CAPITAL GAINS, DIVIDENDS Regarding capital gains taxes, Senator Obama has talked in terms of raising capital gains taxes, perhaps as high as 28%, but that would not apply to homes. U.S. News and World Report’s money and politics blogger James Pethokoukis said that Obama is in favor of a significant increase as part of his Tax Fairness for the Middle Class plan. In an interview with CNBC in March, 2008, Obama said that he favored raising capital gains taxes from %15% to 20% but no higher than 28% Both Obama and McCain favor exempting the first $250,000 of gains from the sale of a primary residence ($500,000 for a married couple on a joint return). So to say that Obama is proposing a 28% capital gains tax on residences is incorrect. The eRumor claims that taxes on dividends would go up to 39.6%. That is a fabricated number. Neither candidate has ever advocated a 39.6% tax on anything. As stated above, Obama talking in terms of raising capital gains, including dividends, to 20% and no higher than 28%. INCOME TAX The forwarded email than lists what income taxes would look like under McCain and Obama. There is no question that the Obama Democratic proposals will result in higher taxes than McCain’s Republican proposals, but the eRumor reports erroneous numbers. The eRumor starts off giving the wrong figures for current taxes. Here are the numbers from the eRumor compared with the actual tax rates for 2008 from the Internal Revenue Service site: Single making 30K – tax $4,500——– Actually $4,100 Single making 50K – tax $12,500—— Actually $8,845 Single making 75K – tax $18,750—— Actually $15,094 Married making 60K- tax $9,000——- Actually $8,198 Married making 75K – tax $18,750—- Actually $11,438 Married making 125K – tax $31,250– Actually $23,938 Regarding a comparison of Obama and McCain tax proposals, the Chicago Sun-Times put together its figures in June, 2008. By their estimates, for example, a person with taxable income of $19,000 or less would pay $597 less under Obama and $19 less under McCain. A person with taxable income of $19,000 to $38,000 per year would pay $892 less under Obama’s plan and $113 less under McCain’s. A person with taxable income between $112,000 and $227,000 would pay $2,300 less under Obama and $3,200 less under McCain. A person with taxable income of $227,000 would pay $23,000 more under Obama and $15,000 less under McCain. INHERITANCE TAX The eRumor says that the inheritance tax was repealed under George W. Bush, which is not true, although there have been numerous attempts to repeal it. According to the Chicago Sun-Times article, McCain would seek to lower the inheritance tax while Obama would raise it on estates more than $3.5 million. Updated 7/18/08 Posted in Money / Financial , Obama , Politics
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