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Comparison of Presidential Candidate Tax Proposals

McCain

Obama

Bush Tax Cuts

1. Make permanent all 2001 and 2003 tax cuts with the exception of estate tax repeal

1. Extend permanently the 10, 15, 25, and 28% rates, the changes to the “marriage penalty”, and the child credit expansion
2. Reinstate top individual tax rates of 36% and 39.6% and personal exemption and itemized deduction phase-outs

Business Tax

1. Reduce top corporate rate from 35% to 25% by 2015

1. Provide tax credit of unspecified amount to companies that remain in the U.S. and meet certain wage and benefit requirements

Business Investment,
Innovation & Growth

1. 100% first-year expensing for 3- and 5-year property
2. Make research credit permanent and convert to a flat credit equal to 10% of research wages

1. Eliminate capital gains tax for small businesses and start-ups
2. Make research credit permanent
3. Increase maximum credit for purchasing advanced technology vehicles to $7,000
4. Extend renewable energy production credit for 5 years

Individual

1. Raise exemption amount for dependent children by two-thirds

1. Create new, refundable credit of up to $500 per worker ($1,000 per working family)
2. Create new, refundable mortgage credit of 10% of mortgage interest for taxpayers who do not itemize
3. Eliminate income tax for seniors making less than $50,000
4. Expand the earned income tax credit
5. Make the child and dependent care tax credit refundable and increase maximum credit rate to 50%
6. Provide a refundable credit for 100% of tuition expenses up to $4,000

Estate Tax

1. Make permanent with $5 million exemption and top rate of 15%

1. Make permanent with $3.5 million exemption and top rate of 45%

AMT

1. Index for inflation, increase exemptions, and eventually repeal

1. Extend and index 2007 AMT patch

Retirement & Capital Gains

1. Lower Medicare premiums
2. Make permanent 0 and 15% tax rates on capital gains and dividends

1. Make the savers credit refundable and increase match to 50% for up to $1,000 in contributions for families earning under $75,000
2. Make 401(k)s and IRAs automatic but still optional
3. Increase maximum tax rate on capital gains and dividends to 20% for persons making over $200,000 ($250,000 for families)
4. Require broker information reporting for basis of gains

Healthcare

1. Replace current exclusion from income for employer-paid premiums with refundable income tax credit of up to $2,500 per individual ($5,000 per family)
2. Nonspecific call for comprehensive health care reform

1. Provide income-related subsidies for health care insurance purchased through newly-created health insurance exchange
2. Require employers to provide insurance or pay a percentage of payroll into the national health insurance exchange
3. Create new, refundable small business healthcare tax credit of 50% of premiums paid by employers

Offsets

1. Repeal domestic production activities deduction
2. Eliminate oil and gas loopholes
3. Institute unspecified corporate “base broadeners” to accommodate rate reductions

1. Eliminate oil and gas loopholes, including repeal of existing tax incentives such as special expensing rules, foreign tax credits, and domestic manufacturing deduction for oil and gas firms
2. Tax carried interests as ordinary income
3. Tax publicly-traded partnerships as C corporations
4. Codify the economic substance doctrine, which requires transactions that qualify for tax benefits to have economic justification beyond those benefits
5. Reallocate multinationals’ tax deductions for firms that export jobs outside of the U.S.
6. Close loopholes in the tax deductibility of CEO pay
7. Reform foreign international tax loopholes to end the incentive for companies to ship jobs overseas and close the offshore pension loophole

Tax Reform

1. Create optional alternative tax system with only two rates and larger standard deduction and personal exemption
2. Require 3/5 majority in Congress to raise taxes

1. Provide taxpayers with simple returns the option of receiving pre-filled tax forms which they could then verify, sign, and submit

Miscellaneous

1. Ban internet taxes permanently
2. Ban new taxes on cell phones
3. Suspended gas taxes for Summer 2008

1. Increase payroll taxes on persons earning over $200,000 ($250,000 for families)

The table is as of Sept. 27, 2008 and based on candidate websites, presentations made by policy advisors to the candidates, and a recent analysis performed by the nonpartisan Tax Policy Center.