Tuesday, July 08, 2008

How the Rich Would Fare Under Obama, McCain

This is all straight from the WSJ. The last paragraph is especially instructive.

There’s a lot confusing information out there about how the next president will tax the rich. But one chart boils it all down. It comes courtesy of the Tax Policy Institute and I’ve reproduced it below. It shows the average percentage change in after-tax income for various groups in 2009. The blue bar is Barack Obama and the red bar is John McCain.

Not surprisingly, Mr. Obama’s plan helps those at the bottom of the wealth ladder while Mr. McCain’s plan helps those at the top. What’s most striking, however, is the divergence in incomes for the truly wealthy — the top 1% and the top tenth of 1%.

Under Mr. Obama’s plan, the income for the top 1% would decline by an average of 9%. The incomes of the top tenth of 1% would shrink by more than 10%. Under Mr. McCain, incomes for the top 1% would grow by 3%. The top tenth of 1% do best — with more than 4% growth in incomes.

The estate-tax differences are also stark. Both candidates plan to increase the estate-tax exemption, and would also reduce the rate as it’s now scheduled through 2010. Yet Mr. McCain would raise the exemption and lower the rate more. The impact: 8.8 million Americans in 2009 would file estate-tax returns under Mr. McCain, while 15.5 million would file under Mr. Obama’s plan. Mr. McCain’s plan would collect $4.2 billion in estate taxes, while Mr. Obama’s plan would collect $17.9 billion.

It’s unlikely either plan will be implemented as is. But one thing is clear: Mr. Obama sees taxes as a way to ease inequality, while Mr. McCain sees them as a way to encourage economic growth by helping the top.