I have been looking at the tax plans for both presidential candidates. I believe that both have good ideas and bad ideas. But it’s fair to say that we really don’t know if either of them will work.

It is true that Barack Obama’s plan is focused more on helping the “common man”, by providing tax relief to middle America - but at what expense?

Will a measly $1,000 a year really make the difference? How are we going to pay for it? The national deficit is growing at an alarming rate and additional tax cuts will just add to it.  This could have long term devastating effects on the economy and the value of the once “almighty dollar”.

On the other hand, John McCain’s tax plan calls for giving big business and the highest earners the larger tax cuts.  The “trickle down economics” of the republican plan doesn’t sit well with most Americans. But let’s be fair - it had worked in the past (some will obviously disagree).

So what is the right course to take on tax reform?  Everyone has ideas, but no one knows for sure.  I believe that giving the middle and lower classes a tax break can help the “psychology” of America.  It can help average folks feel like there is a future - that this economic crisis can be turned around.

The Obama plan calls for promoting and supporting domestic small businesses and that is great for America.  I believe that John McCain feels that same way, but he hasn’t really come across as the savior for the middle class.

I think both candidates agree that Alternative Minimum Tax must be eliminated. The tax reforms of 2001 expire in 2010 and AMT will tax more than 20 million Americans, if it is not changed.

John McCain’s plan calls for cutting the corporate tax rate to 25%, down 10% from the current 35%.  But will that only help big business?

Both candidates agree in health care reform. But again, it will cost trillions, yes trillions of dollars in the long run. Can we afford it - can we afford not to do it?

The bottom line is this: We won’t know what will work until a new president is elected,and the tax plan has time to mature.

I hate to say it - but most Americans want immediate gratification and middle class Americans deserve something to look forward to. The John McCain plan sounds great for big business and the wealthy - but what about the rest of us?

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.

According to CBS News, for the second day in a row, Sarah Palin focused the entirety of her attacks against Barack Obama on the Democratic nominee’s tax plan, rather than his personal associations.

“Just yesterday, we learned that America’s GDP actually fell in the third quarter of this year, and that confirms what we already know, and that’s that our economy right now is shrinking,” Palin said. “This is the worst possible time to raise taxes, but Barack Obama still wants to.”

Palin repeated her mantra that Obama has “an ideological commitment” that compels him to raise taxes.

“Now, his whole tax plan, really, it is, it’s so phony that it’s already starting to unravel, and we’re gonna call it the way that we see it,” she said.

Palin said that Obama’s definition of what constitutes the middle class seems to be evolving.

“And just this morning, Gov. Bill Richardson, a top surrogate for the Obama campaign, he who is working so hard to get Obama elected, Richardson said Obama’s tax plan would define middle class as $120,000 a year and under,” Palin said. “So now, we’re down to less than half the original income level and, just give it a little more time, and Barack Obama will be back to raising taxes on folks earning $42,000 a year.”

Appearing on KOAM radio this morning, Richardson said, “What Obama wants to do is he is basically looking at $120,000 and under among those that are in the middle class, and there is a tax cut for those,” according to a YouTube clip of the interview.

Richardson’s comments appear to have been a slip of the tongue, since the Obama campaign has not announced that it has changed its policy that everyone making less than $200,000 a year would get a tax cut and no one making under $250,000 a year would be burdened with a tax increase.

There seems to be a lot of confusion about the Obama-Palin Tax Plan. The true definition of the Obama tax plan appears to be elusive; it seems that everyone has a different opinion of exactly who will pay more, and who will pay under the democrat’s plan. Is it “fair and balanced”? It depends who you ask!

According to the Washington Post, new analysis by the Tax Policy Center, a joint project of the Urban Institute and the Brookings Institution, Democrat Barack Obama and Republican John McCain are both proposing tax plans that would result in cuts for most American families. Obama’s plan gives the biggest cuts to those who make the least, while McCain would give the largest cuts to the very wealthy. For the approximately 147,000 families that make up the top 0.1 percent of the income scale, the difference between the two plans is stark. While McCain offers a $269,364 tax cut, Obama would raise their taxes, on average, by $701,885 - a difference of nearly $1 million.

Here is your tax savings based on your annual earnings:

*the numbers have been rounded