We are hearing so many different intepretations of what the presidential tax plans will or will not do.  Here are the details of the John McCain tax plan:

1. Over five years, the starting points for the 28% tax bracket would be increased, from the current $43,050 in taxable income to $70,000 for couples, from $34,550 to $52,000 for single parents, and from $25,750 to $35,000 for singles without children. Note that the dollar figures refer to taxable income, so that, for example, families of four would get no benefit until their total income exceeds about $65,000 (in 1999 dollars). The full benefit would not be realized until income approaches $100,000. Because the new starting point for the 28% bracket for couples would be double the single level (although not twice the level for single parents), the change would reduce “marriage penalties” for many couples.
2. The $500 per child tax credit would be increased to $750 per child in 2001 and to $1,000 per child in 2002 and thereafter.
3. The estate tax exemption would be increased from the current $1 million to $5 million (effectively $10 million for couples), phased in over ten years.
4. Over five years, the standard deduction for couples would be increased by 19% (to twice the single amount) and for single parents by 16%. These changes would provide tax relief to many filers who take the standard deduction, as well as to some itemizers. (About 2 million current itemizers would switch to the increased standard deductions.)
5. Up to $200 ($400 for couples) in interest and dividends would be tax-exempt.
6. Limits for 401(k) plan contributions would be increased to $15,000 a year, and similar changes would be made to certain other kinds of retirement savings plans.
7. “Medical Savings Accounts” would no longer be limited to 750,000 taxpayers; the annual contribution limit on “Education Savings Accounts” would be doubled to $1,000; and new tax-deferred “Family Savings Accounts” would be provided for bottom-bracket taxpayers (few of who could afford to take advantage of them).
8. Long-term care insurance premiums would be made deductible.
9. Military personnel overseas would be exempt from tax on some or all of their earnings.
10. A 100% tax credit would be provided for gifts to public and private elementary and secondary schools, up to $200 a year. If all eligible taxpayers took advantage of this free opportunity to help their local schools, this provision could cost more than $17 billion a year (in 1999 dollars). Sen. McCain’s estimate of the size of his tax cuts does not appear to reflect the large potential cost of this school-aid program, which could be implemented more straightforwardly and with better targeting through direct grants to schools. (The distribution tables that follow do not include this credit, which appears to be intended as a backdoor way to funnel money to schools, rather than as a tax relief program.)
11. To offset much of the cost of his tax cuts, Sen. McCain proposes to curtail numerous corporate tax breaks, totaling $151.7 billion over five years. Sen. McCain provides an illustrative list, but does not specify the exact loopholes he would close.

There is one week left before Americans go to the polls and vote for the next president of the United States of America. According to top political survey polls, Barack Obama has increased his lead by 8 to 10 percentage points.

Are you still on the fence about who to vote for? Will the candidates tax plans influence your vote? Well, here is a quick reference that clears up any questions you may have about Senator Barack Obama’s tax cut plan.

Married couples making $75,000, with 2 children, with one of them in college would be entitled to a tax cut of:

$3,700, this amount includes…

• $1,000 Making Work Pay Tax Credit
• $ 500 universal mortgage credit
• $4,000 college credit

Married couples making $90,000 would be entitled to

$1,000

Single parents, making $40,000, with 2 young children and childcare expenses would be entitled to:

$2,100, this amount includes…

• $500 making work pay tax credit
• $500 universal mortgage credit
• $1,100 from Obama expansion of the child care tax credit

A 70 year old widow making $35,000 would be entitled to:

$1,900

These calculations are based on IRS Statistics of Income. The good news is that these tax savings are actually conservative, because they do not account for other tax credits and incentives that you may qualify for, specifically:

• $500 in savings from expanded Savers Credit
• $2500 in savings per family from the Obama healthcare plan

Find out more of the Obama Tax Plan.