With only a few primaries left many people are pointing to Sen. Barack Obama as the victor of the Democratic nomination. However, Sen. Hillary Clinton is still committed to finishing the race on the claim that she is more likely to beat Sen. John McCain in the general election, and she does have statistics from national polls to back up her claims. The only hope for Clinton is if the delegates decide to give her the nomination since neither candidate will get the required number of delegates through the election cycle. Nevertheless, since Hillary is still considered one of the candidates for the Democratic nomination, I included her in my in-depth look at the candidate’s tax plans.
Gas Tax Holiday
Clinton’s support of a gas tax holiday has become a key component of her campaign in the remaining primary elections, however it has caused her more negative criticism than positive. At first the idea of a gas tax holiday seems like a good one. People across the nation are complaining about increases in the cost of fueling their vehicles and they want to get relief. By endorsing the gas tax holiday, it seemed like Clinton was making a good campaign move by showing Americans that she understood their hardships and wanted to do something about it.
However, soon it was clear to many that a gas tax holiday was little more then just a good campaign talking point. If enacted, experts agree that the holiday would do little to help the American consumers. Federal excise taxes on gasoline are under 20 cents per gallon, and eliminating the tax would do little to counterbalance the ever-increasing price on fuel. Additionally, by eliminating the tax it would cost the federal government upwards of $125 million that would usually go to federal road repairs and infrastructure improvements.
Finally, there is the problem of supply and demand, which I personally think has been slightly over-exaggerated. The argument is that with lower prices the demand would increase and there would be little benefit to consumers. However, its important to remember that the tax holiday would only apply to American taxpayers, and that the effects on the world market would be negligible.
Let Bush Tax Cuts Expire
Clinton and Obama are on the same page when it comes to President Bush’s 2001 and 2003 tax cuts – let them expire. In a democratic debate Clinton took a firm stand on this issue claiming, "I will make it clear that the Bush tax cuts on the upper income, those making more than $250,000 a year, will be allowed to expire."
"I will let the taxes on people making more than $250,000 a year go back to the rates that they were paying in the 1990s," she continued. Hillary has gone to great efforts to promote the fact that she wants to increase taxes on only the wealthiest Americans, not the middle class. However, conservative and "Reagan Democrat" voters often react negatively to any type of tax increase, regardless if it will directly affect their paychecks. If Hillary does win the nomination, she will need to really drive home the fact that the increase will not affect middle to higher middle income Americans.
Extend Low Income Tax Credits
Although Clinton does not favor as much lower income credits as Obama, she still does support extending additional credits targeting people living on low wages. One of the tax credits Clinton supports is extending the Child Tax Credit to cover the first year of a child’s life. Clinton aims to make it easier for parents to stay home and care for newborn children. "Our tax policies do not reflect the cost of raising children," claims Clinton. "We should expand the child tax credit for the first year of a child's life to help parents stay home and give lower-income parents who receive government support for child care the option to sue the subsidies to cover the costs of staying home and caring for their own children." Clinton’s plan to increase low income tax credits may sound nice, but without reducing their overall tax burdens, small credits can only do so much to help someone get out of poverty.
Strengthening the Middle Class
The biggest part of Hillary’s tax proposal is to help strengthen the middle class. "I am absolutely committed to not raising a single tax on middle class Americans," claimed Clinton. "In fact, I have a very specific plan of $100 billion in tax cuts. My priorities are middle-class tax cuts and support for the middle class, to make college affordable, retirement security possible, health insurance affordable."
The phrase "strengthen the middle class" is a great campaign move on Clinton’s behalf as studies show that people like to consider themselves middle class regardless of their actual income. Both the phrases lower class, and upper class have negative connotations so targeting the "middle class" has helped Hillary appeal to the general public. However, the government needs to make money somehow, and Clinton cannot expect to only raise taxes on the highest income individuals. The public does not generally favor unbalanced tax increases, and it will be difficult for Clinton to drastically increase taxes on the wealthiest while lowering taxes for everyone else.
Revise AMT & Index to Inflation
Although Clinton previously voted against reducing the AMT (alternative minimum tax) in the Senate, she now appears to support some revisions to the highly unpopular tax. "I'll tell you something that we are going to have to deal with, the alternative minimum tax, which falls heavily on a lot of you and your families," claimed Clinton at the 2007 IAFF Presidential Forum. "You know, for six years I've been saying, with all due respect, do the billionaires in America need more tax cuts? Don't you think we ought to cut the taxes of middle income people, in particular those who are going to be hit by the alternative minimum tax?"
As the AMT impacts more and more families the tax is being considered widely unpopular, and is something that all the candidates are striving to fix. However, along with Clinton’s overall plan to strengthen the middle class, you have to wonder where all this extra money is coming from? All the tax cuts and credits would cost the government billions of dollars in lost revenue, and I am doubtful it could all be made up for with taxes on the rich.
Affordable College Education
At the heart of her plan to strengthen the middle class is Hillary’s tax cuts designed to make college more affordable for everyone. "When it comes to higher education – we shouldn’t be playing catch-up with the world – we should be leading it," claimed Clinton in a press release about her plan. "I believe that college shouldn’t just be a privilege for the wealthy – but an opportunity for anyone with the talent, determination and ambition to learn. And I believe that every American should have access to lifelong learning opportunities – from apprenticeships, to community college, to the most select four-year institutions."
Hillary’s college plan would basically boil down to a $3,500 credit which she claims is enough to cover more than 50% of the cost of tuition at the average public institution. But with rising community college prices, and ten thousand dollar per semester bills at many universities, I wonder how big of an impact this credit will actually have?
Small Capital Gain Increase
Although Clinton has not gave an official yes or no on increasing the Capital Gain tax rate, she has noted that if she did increase the rate it wouldn’t be by much. "I wouldn't raise it above the 20% if I raised it at all," notes Clinton. Although a small increase would not generate as much revenue as Obama’s plan to nearly double the tax rate, it seems much more "doable." The increase would still generate billions of dollars in new revenue but would not have a massive impact on Americans who invest.
Economic Military Changes
Although her military and security plans do not have a direct impact on the taxes paid by Americans, it will have an impact on the country’s budget that will trickle down to taxpayers. Included in Clinton’s proposal are a few costly measures, including: redeployment of troops in Iraq, increased commitment to Afghanistan and Pakistan, increased military research budgets, and a pay raise for wartime troops.
