Supreme Court Nominee Elena Kagan

By now you have all probably heard about Elena Kagan, President Obama's nomination to replace Justin Stevens on the Supreme Court. Although her confirmation hearings have not yet began, I decided to make some predictions, based upon her career thus far, about her business and tax views.

No Tax Records

It is very difficult to determine exactly what impact Kagan would have on the U.S. tax code because, if confirmed, she would be the first Supreme Court Justice—in nearly four decades—to serve without any prior experience as a judge.

Respected Member of the Law Community

Kagan has a Bachelor's degree in history from Princeton, a Masters in Philosophy from Oxford and a J.D. from Harvard. She was a professor at the University of Chicago Law School, before being appointed as dean of Harvard Law School. Kagan is a highly respected member of the legal community.

Clerking Experience

Kagan worked as a clerk for Judge Abner Mikva, as well as Justice Thurgood Marshall. Mikva is widely known as a very progressive member of the DC Court of Appeals, which has led many to believe that Kagan will be progressive if confirmed to the U.S. Supreme Court. However, because of her limited record on social and fiscal issues this is merely an assumption.

Pro Shareholders as Solicitor General

Although she has never served as a judge, Kagan has been serving as Solicitor General since Obama took the White House. During her time as Solicitor General, she joined lawsuits on the side of shareholders against companies and mutual funds. According to Bloomberg, prior Solicitor Generals did not side with shareholders, leading many in the business community to consider her nomination as a slap in the face to many large corporations.

Social Justice

Although we do not know much about her tax views, according to A Taxing Matter, Kagan wrote her senior thesis at Princeton on the socialist movement in New York City in the early 20th century. Therefore, we can predict that Kagan is at least informed about arguments for social justice in our "capitalist-based economic system."

Furthering Obama's Tax Agenda

Kagan has been considered as a possible Supreme Court Justice since Obama won the election in 2008. As this article published last month on NY Times.com explains, Kagan is known for supporting "assertions of executive power." Therefore, we could expect that she would support Obama's tax agenda if confirmed to the U.S. Supreme Court, which could have significant impacts on the U.S. tax code.

Ballot Issues Test Anti-Tax Mood

From USAToday.com:

The nation's fervor against taxing and spending will be tested beginning Tuesday in a series of state and local ballot measures seeking major tax hikes to preserve government services.

The ballot issues are making for odd alliances and potential election surprises. Some places friendly to the anti-tax "Tea Party" movement appear ready to raise taxes while opposition to public employee labor contracts is gaining strength in traditional union strongholds.

On May 18, Arizona will decide the biggest and most important measure: a 1-cent sales tax hike for three years that will lift the state's rate to 6.6% and the rate for Phoenix to 9.3%, one of the nation's highest.

The tax increase has no significant organized opposition and is leading in polls. The pro-tax sentiment comes in a state known for conservative politics, including a tough new crackdown on illegal immigration.

McCain Questions Obama's Tax Votes

From CNN.com:

Sen. John McCain told voters Monday that Sen. Barack Obama isn't being honest about his tax votes and said the Democrat is "always cheering for higher taxes."

In response, the Obama campaign called McCain's remarks "false attacks" and an "angry diatribe."

The economy is the No. 1 issue on the minds of voters, polls show, and both candidates are trying to convince voters that they will do a better job of getting the financial crisis under control.

"Two times, on March 14, 2008, and June 4, 2008, in the Democratic budget resolution, he voted to raise taxes on people making just $42,000 per year. He even said at the time that this vote for higher taxes on the middle class was 'getting our nation's priorities back on track,' " McCain said at a rally in Columbus, Ohio.

"Then something amazing happened: On Friday night, he looked the American people in the eye and said it never happened. My friends, we need a president who will always tell the American people the truth," McCain said.

McCain said a vote for Obama would "guarantee higher taxes, fewer jobs and an even bigger federal government" and charged that "these policies will deepen our recession."

Shortly after McCain finished his speech, the Obama campaign accused the Arizona senator of lying.

"Sen. McCain's angry diatribe today won't make up for his erratic response to the greatest financial crisis of our time. John McCain knows that the budget he's talking about didn't end up raising taxes on a single American, and the lie he told the American people today is all the more outrageous a day after he admitted that his health care plan will increase taxes on some families," Obama campaign spokesman Tommy Vietor said.

In McCain's speech, the Republican presidential candidate was referring to votes on a resolution (Senate Concurrent Resolution 70) meant to outline the Senate's budget priorities through 2013, but the measure had no practical effect.

According to a CNN review of the resolution, it assumes that most of the 2001 and 2003 tax cuts pushed by President Bush will expire in that time, which McCain says amounts to a tax increase. Obama and his running mate, Sen. Joe Biden, voted "yes" on the resolution. McCain did not vote.

The Latest from the Candidates on 10 Important Economic Issues

Election day is only a few weeks away, and although I’ve blogged recently on the Vice Presidential candidate’s tax views, it has been a while since I have spent much time researching the latest on Sen. McCain and Sen. Obama’s views on economic issues. In my efforts to decide which candidate to cast my vote for I gathered the following list of the candidate’s views on 10 important economic issues, and I hope the information will help all of you make an informed decision this November as well!

1. Small Business

McCain:

By helping small business owners afford new equipment and technology, McCain hopes to promote growth in new and small businesses. He has also proposed a small business health care plan that would take the form of a tax credit that would be purchased personally and could be transferred to a different job if the employee where to leave their current position.

Obama:

Obama has long been a supporter of raising minimum wage to keep up with the cost of living. To help those struggling with the uneven difference between the cost of living and wages Obama plans hopes to continually index the minimum wage with the cost of living. His small business health plan also includes a refundable credit of 50% for employers that pay their employee’s health insurance premiums.

2. Personal Taxes:

McCain:

Extending the Bush tax cuts that were put into place in 2001 and 2003 is something McCain has been clear on from the beginning. He’s also dedicated to eliminating the Alternative Minimum Tax, as he feels it is unnecessary and completely replaceable. In its place, McCain hopes to put into place a two-rate income tax code that would greatly simplify our tax system.

Obama:

Although at first he supported repealing the Bush tax cuts, Obama now claims that he would not fully repeal the cuts but adjust them. However, he does not support extending the cuts past their expiration date. Obama also once claimed that he wanted to double the capital gains rate, but has since lowered his stance leaving many to wonder if he actually intends to target capital gains taxes or not. Obama is a strong supporter of tax cuts for low wage and middle class families, and has proposed numerous tax cuts aimed at helping American families.

3. Energy Security

McCain:

McCain is well known for his adamant support of nuclear energy has strong views about energy and the conservation of it. While he recognizes the threat of global warming, he still feels that nuclear energy is a safe and efficient way to go. McCain also supports offshore drilling as relief for high prices at the gas pump, and feels exploring other expensive energy options is simply not smart or affordable for our economy at this time.

Obama:

Taking pains to look into any and all alternative energy sources, Obama is not the biggest fan of nuclear energy as a main source. He is honest about gas prices, and has admitted that he understands the strain Americans are under. However, he does not support offshore drilling as a solution. However, in an attempt to push through some of his own policies on energy independence, he voted for limited offshore drilling in addition, as a compromise.

4. Real Estate & Foreclosures

McCain:

Though both candidates agree the real estate market is in trouble, they have slightly different takes on how the governments should intervene. McCain wants to offer limited financial aid and advice to borrowers, but with strict rules, restrictions, and guidelines. He also feels home rescue efforts are dealt with best within local communities and would provide additional funding to make that possible.

Obama:

Taking a strong defense against predatory loans, if elected Obama would work to create a $10 billion fund to help victims of such loans. He is appalled by the government’s willingness to bail out large investment banks in trouble, but reluctance to help individual citizens. In order to counteract this, Obama would create a 10% tax credit, awarded to any homeowner who does not itemize their taxes, and allow subprime borrowers to fight abusive lending practices. He would also set aside an additional $10 billion to maintain local government structures and authorize bankruptcy judges to reduce mortgage principal.

5. Health Care

McCain:

His voting record is limited on healthcare, but McCain still seems to have pretty strong views on the subject in this election season. His plans for overall healthcare seem to pertain especially to children without insurance as well as senior citizens. He has claimed that he would like to get health insurance to the 11 million children in this country without it, and also hopes to match funds for senior citizen’s prescription drugs. He did however vote against including prescription drugs under Medicare, a decision that has upset a lot of voters hoping to see large change in the healthcare system.

Obama:

Obama feels so strongly that healthcare should be available to every American, that he would like it to be a universal right, like our neighbors in Canada. Obama hopes to use money from ending the Iraqi war to make healthcare more affordable for every American. He also feels strongly about obesity, stating that by reducing the obesity rate we can save billions in wasted health care. Obama knows taking on insurance companies is a messy but necessary job in making healthcare as well as prescriptions reasonable. He also feels the terminally ill should never have to worry about money, and the right to live should be clearly theirs regardless of their financial status.

6. Mortgage Giant Rescue

McCain:

Although he missed the senate vote to give aid to Fannie and Freddie through temporary authority from the Treasury, McCain still supports the decision. He would like to replace the agencies management as well as end their lobbying and stop company dividends. Like so many others, McCain feels it is necessary to make sure companies like this do not collapse.

Obama:

Although he also supports providing aid to Fannie and Freddie, Obama does not support protecting the investors or CEOs involved with them. In addition to missing the vote for the federal bailout, Obama also missed voting for the housing bill president Bush signed into law in July.

7. Balanced Budget

McCain:

Well known for his strong dislike of earmarks, McCain vows he is very dedicated to cutting wasteful spending and balancing the budget. He was one of two republicans who voted in 1995 and 1997 to take social security off budget, and supports the balanced budget amendment, which would require an annual balanced budget. With the money he plans on gaining from cutting taxes, McCain plans on putting the money into Medicare, social security, debt reduction, and tax cuts. However, he also wants to enforce existing spending caps later on.

Obama:

By ending the war on Iraq, and taking away tax cuts for the wealthiest Americans, Obama plans to save billions of dollars and use the funds towards debt and budget crisis within our own country. Although Obama voted against a bill to reduce overall federal spending by $40 billion he claims he did not support the bill because it reduced funding for Medicaid, conservation, Medicare, agriculture, employee pensions, and student loans.

8. Free Trade

McCain:

John McCain feels globalization is an opportunity, and in 1999, he stated “we are in a global marketplace, and that is exceptionally good news for American families. Withdrawing from it is not just inadvisable, it is impossible. Free trade is indispensable to our prosperity. In other words, the less America trades the poorer America will be.” McCain thinks we need to reduce, not restrain, barriers to trade with other countries so we can profit from such goods. He supports NAFTA, GATT, and WTO. However, some critics feel McCain’s feelings towards free trade are too open, and that he is not fully taking safety measures and foreign policy issues into account.

Obama:

Obama feels free trade is a great opportunity, but one that needs to be fairly regulated. He has said he feels it is important to keep safety, strong labor, and environmental standards in mind. In February of 2008 he explained, “it is absolutely critical that we engaged in trade, but it has to be viewed not just through the lens of Wall Street, but also Main Street, which means we've got strong labor standards and strong environmental standards and safety standards, so we don't have toys being shipped in the US with lead paint on them.” Obama also feels NAFTA needs to be amended, and is a strong fighter for not just free trade, but fair trade.

9. The War in Iraq

McCain:

Due to it’s high costs the war has become a top economic issue in this election season. It is also an issue the candidates strongly disagree on. McCain is a strong supporter of the war, still calling it a “war on terror.” He even went as far to say Obama would “rather lose a war in order to win a political campaign." Not as concerned about what the war is costing the country, McCain feels it is well worth it for the safety if our citizens.

Obama:

Strongly opposing the war, Obama feels it is not only disrespectful and embarrassing occupying Iraq, but a complete waste of money. At a primary debate Obama claimed, “we have spent billions of dollars, lost thousands of lives. Thousands more have been maimed and injured as a consequence and are going to have difficulty putting their lives back together again. This has undermined our security. In the meantime, Afghanistan has slid into more chaos than existed before we went into Iraq.”

10. Recession

McCain:

Up until very recently McCain was against the term “recession”, stating earlier that “part of the problem in any recession is psychological. I'm still optimistic that nothing is inevitable.” He felt by doing things like eliminating the AMT and permeating tax cuts we could prevent a recession. However, just this past week both candidates claimed within 24 hours of each other that the term “recession” is exactly the term you could use to describe our economies status at this point.

Obama:

Taking a strong opinion on the economy, Obama feels it’s very weak and a recession is a reality we all need to face. “The news with Freddie Mac and Fannie Mae, I think, along with the unemployment numbers, indicates that we’re fragile,” Obama stated earlier in the month. However, he arose both applause and criticism when he stated he still dislikes Bush’s tax cuts and feels his must take place regardless of recession “even if we’re still in a recession, I’m going to go through with my tax cuts,” Obama said. “That’s my priority.”

60 Minutes Gives Biased Coverage

According to MediaMatters.org, and many other political news sites, ABC’s news program 60 Minutes was biased of the candidate’s tax proposals during their interviews with Barack Obama and John McCain. In the broadcast the correspondents praised Obama’s plan, while intentionally saying nothing good about McCain’s. Bellow is the summary of Media Matter’s findings, but you can read their full report by clicking here.

During interviews with Sens. John McCain and Barack Obama, CBS 60 Minutes correspondent Steve Kroft characterized Obama's economic agenda as "ambitious and expensive," citing the costs of Obama's infrastructure, alternative energy, and health care plans, but there was no similar characterization of McCain's tax agenda by correspondent Scott Pelley, who interviewed McCain, even though, according to the Tax Policy Center, McCain's tax plan would likely add $1.5 trillion more to the federal deficit over 10 years than Obama's tax plan.

Another Misleading McCain Ad

Republican Presidential Nominee Sen. John McCain has put out yet another misleading ad about Sen. Barack Obama, according to the non-partisan site FactCheck.org. Embedded below is a video of the commercial, via McCain’s YouTube channel, and FactCheck’s summary of the distortions.

The McCain-Palin campaign has released a new ad that once again distorts Obama's tax plans.

• The ad claims Obama will raise taxes on electricity. He hasn't proposed any such tax. Obama does support a cap-and-trade policy that would raise the costs of electricity, but so does McCain.

• It falsely claims he would tax home heating oil. Actually, Obama proposed a rebate of up to $1,000 per family to defray increased heating oil costs, funded by what he calls a windfall profits tax on oil companies.

• The ad claims that Obama will tax "life savings." In fact, he would increase capital gains and dividends taxes only for couples earning more than $250,000 per year, or singles making $200,000. For the rest, taxes on investments would remain unchanged.

The McCain campaign argues in its documentation for this ad that, whatever Obama says he would do, he will eventually be forced to break his promise and raise taxes more broadly to pay for his promised spending programs. That's an opinion they are certainly entitled to express, and to argue for. But their ad doesn't do that. Instead, it simply presents the McCain camp's opinion as a fact, and it fails to alert viewers that its claims are based on what the campaign thinks might happen in the future.

Biden and Palin – Comparing and Contrasting their Tax Views

Over the past week there has been a lot of media attention on the United States economy. With huge government buyouts, and record-breaking drops in the stock market, Americans are looking to the Presidential candidates for more information on their tax and economic plans.

In the past week weeks I have given an in depth look at both Vice Presidential candidate’s (see the entries on Sen. Joe Biden and Gov. Sarah Palin), and with the recent developments in our economy I thought it prudent to also compare the differences in their respective tax views on a few key issues.

Balanced Budget:

Joe Biden:

Senator Biden feels strongly that a balanced budget should be high up on the next president’s priority list. On top of consistently voting for what he believes were fair and balanced budget amendments since 1997, Biden has also voted against bills he felt would lead to an unbalanced budget. In 1990, Biden voted against George H. W. Bush’s budget bill, which aimed to raise taxes drastically over a five-year period. In 2000, Biden also voted against making tax cuts a priority over national debt reduction.

Biden’s own budget plan for the next few years includes cutting funding for the war (by which he hopes to generate over $100 billion in federal revenue), and eliminating tax cuts for the wealthiest Americans. He also plans on eliminating tax cuts for investment on dividends – which he claims could generate $195 billion in revenue over time.

Sarah Palin:

From the moment Palin took office as the Governor of Alaska, she began looking for ways to cut spending in all areas of the government. By cutting local project programs, selling a corporate jet, firing unnecessary government staff, and directing state agencies to reduce excess spending, she was able to reduce the states spending by $124 million. However, a $7 billion education and savings plan, new ice rink, and other local investments eventually led her state into debt. While the governor made many positive changes to Alaska and provided youth and cultural opportunity, debate rages at to whether her cuts were effective or not.

The difference:

Both candidates obviously agree that balancing the budget is an important task, though possibly on different levels. While Biden has experience working as a Senator to fix the national budget, Palin’s experience is limited to the state level. Without further statements from Palin herself, it’s hard to tell exactly what her plans for the budget are on the national level.

Gasoline Prices, Taxes, and Solutions:

Biden:

Knowing our dependence on oil and need for change, Biden has outlined multiple ways to help fix our countries current energy crisis. While other candidates have supported a gas tax holiday, Biden opposes the concept claiming that is merely a temporary solution. By pushing to reduce our dependence on oil entirely, Biden hopes to ease the demand for fossil fuels and also fight global warming. In 2005 he voted yes to bills that aim to significantly reduce oil by 2025, and for tax incentives to encourage energy production and conservation. He also voted against multiple bills promoting oil leasing programs in Alaska’s ANWR.

Palin:

A strong supporter of a gas tax holiday, Palin feels there is plenty of oil available for drilling in this country. Alaska has some of the highest gas prices in the country, and to help out citizens of her state Palin signed a gas tax holiday into law, and also pushed to get one time energy rebates sent out to Alaska taxpayers. Another one of Palin’s energy programs was known as Alaska’s “energy efficient month,” where the government provided incentives for reduced energy consumption. Although Palin has achieved some success in helping Alaska’s energy problems many wonder whether or not she will be able to do the same on the national level as the programs were made possible by windfall taxes from oil companies drilling in Alaska.

The Difference:

The only real similarity between the candidates is the fact that they both realize we are in an energy crisis. While Biden plans to make our nation less dependent on petroleum, Palin is very vocal about her support for increased offshore drilling. Palin does claim she supports green energy projects, but views them of secondary importance.

Earmarks:

Biden:

It is no secret that senator Biden has quite an earmark record. His FY09 requests total about $330 million, and it has caused a lot of bad publicity for Biden. Although it is not uncommon for members of Congress to take advantage of earmark spending, it is not helpful for a campaign running on the idea of change in a time of economic uncertainty.

Palin:

Although she’s taken stride to criticize both Obama and Biden on their earmark spending, Palin does have a record of wasteful spending. The infamous “bridge to nowhere” project, which she first embraced and then, later, dropped, was estimated at about $398 million. Obama criticized Palin for the first time ever on September 6^th, and on her earmark policies in particular:

"I know the governor of Alaska has been saying she's change, and that's great," Obama said. "She's a skillful politician. But, you know, when you've been taking all these earmarks when it's convenient, and then suddenly you're the champion anti-earmark person, that's not change. Come on! I mean, words mean something, you can't just make stuff up."

The Difference:

While no one tries to say straight out they “favor” earmarks, Biden is, if at all, more open and honest about it. It was a considered risky move on Palin’s part to be so critical on earmarks when she had does have some history of them herself.

Gov. Sarah Palin: a Deeper Look at her Tax Views

Both presidential candidates have chosen their Vice Presidential picks and Election Day is a mere two months away. On August 29, 2008, Sen. John McCain announced his choice to have the Governor of Alaska, Sarah Palin, serve as his running mate. Within minutes, controversy began, and Palin’s personal life was thrown into the limelight – as well as the rest of her family. However, with so much media attention on Palin’s personal life, it is hard to get a clear view of her position on more important issues, like taxes. To help the readers of my blog make an educated decision come this election I have put together the following outline of Palin’s tax views.

Energy Tax Rebates

In her own state of Alaska, Palin proposed a monthly $100 rebate for all Alaskans to help deal with energy and fuel prices. She soon dumped the monthly idea and decided to make it a flat rebate of $1,200 instead. However, criticism rose almost immediately because the flat rate did not suit every Alaskan’s needs, as fuel prices and demand are different in every region.

Balanced Budget and Tax Relief

As soon as Palin was elected as Governor she carried out a campaign promise and sold a corporate jet purchased by her predecessor for $2.1 million on eBay. Determined to reduce State Budget, she then signed the largest operating budget in Alaska history, $6.6 billion. She also slashed hundreds of construction projects in Alaska, cutting $237 million from the construction budget. The closure of some projects was applauded, while others were criticized, but the state needed the funds regardless of popularity.

In 2007 Palin took on the biggest construction project, the infamous, “Bridge to Nowhere”, which she had originally wanted to rebuild but then later opposed. “She made the final decision to kill a very bad project, so she deserves credit for that. But she didn’t do it as an ideological opponent of earmarks. She did it as someone who had to balance the books,” Keith Ashdown, a tax investigator told the Washington post.

Oil Taxes

Alaska’s economy and way of life has come to depend strongly on oil wealth. Palin proposed a $750 million oil tax increase, which eventually came to $1.5 billion. As soon as the bill was approved in the state’s legislature, Palin signed it into law.

However, she has also fought hard to try to open the Arctic National Wildlife Refuge for drilling, which many environmentalists and citizens across the country strongly opposed. The people of Alaska however, who’s economy depends on oil, agree with the drilling.

Finally, Palin has also been a strong supporter of a gas tax holiday, which received national attention when it was supported by McCain and Sen. Hilary Clinton.

Dairy Farm Closure

One of Palin’s more controversial finance choices was her choice to keep a state-owned dairy farm open. The Alaska creamery board recommended that the Matanuska Maid Dairy be closed, but Palin decided to keep it against their advice. Controversy arose when Palin replaced the entire membership of the Board of Agriculture and conservatism (the only people who could fire or hire members of the Alaska creamery board). In 2007, it became clear that the business was unprofitable and not worth keeping. At that time, Palin decided to just sell the farm.

Sales Tax Increase

As mayor of Wasilla, Palin followed through promises to reduce property taxes as well as her own salary. However, she did have to raise the sales taxes by almost half a percent to pay for an indoor ice rink and sports facility though. The project would cost over $15 million to build, but could greatly stimulate small town’s economy. The tax increase was necessary to pay for the ice rink, as the state had already spent their budget on road and sewer projects. Palin pushed to have the sports facility built quickly, before the city had a clear title, and got a bad reputation as the property was in litigation for 7 years.

Tax Topics in McCain’s Speech

At the end of last week, Sen. John McCain officially accepted the Republican nomination for president, and spoke to the crowd at the Republican National Convention. Embedded below is a video of McCain’s speech, and I have also included bullets of the tax issues mentioned in his speech, thanks to TaxProf.

• We believe in low taxes, spending discipline, and open markets. We believe in rewarding hard work and risk takers and letting people keep the fruits of their labor.
• I will keep taxes low and cut them where I can. My opponent will raise them. I will open new markets to our goods and services. My opponent will close them. I will cut government spending. He will increase it.
• My tax cuts will create jobs. His tax increases will eliminate them.
• Keeping taxes low helps small businesses grow and create new jobs. Cutting the second highest business tax rate in the world will help American companies compete and keep jobs from moving overseas. Doubling the child tax exemption from $3500 to $7000 will improve the lives of millions of American families.

2008 Republican Tax Platform

The Republicans recently released their 2008 Republican Party Platform, which outlines the party’s views on major issues in the next election. You can download a 67 page PDF of their full platform by clicking here. Below are the tax related items of the platform courtesy of Tax Prof.

“Republican Tax Policy: Protecting Hardworking Americans:

The most important distinction between Republicans and the leadership of today’s Democratic Party concerning taxes is not just that we believe you should keep more of what you earn. That’s true, but there is a more fundamental distinction. It concerns the purpose of taxation. We believe government should tax only to raise money for its essential functions.

Today’s Democratic Party views the tax code as a tool for social engineering. They use it to control our behavior, steer our choices, and change the way we live our lives. The Republican Party will put a stop to both social engineering and corporate handouts by simplifying tax policy, eliminating special deals, and putting those saved dollars back into the taxpayers’ pockets.

The Republican Agenda: Using Tax Relief to Grow the Economy

Sound tax policy alone may not ensure economic success, but terrible tax policy does guarantee economic failure. Along with making the 2001 and 2003 tax cuts permanent so American families will not face a large tax hike, Republicans will advance tax policies to support American families, promote savings and innovation, and put us on a path to fundamental tax reform.

Lower Taxes on Families and Individuals

• American families with children are the hardest hit during any economic downturn. Republicans will lower their tax burden by doubling the exemption for dependents.
• New technology should not occasion more taxation. We will permanently ban Internet access taxes and stop all new cell phone taxes.
• For the sake of family farms and small businesses, we will continue our fight against the federal death tax.
• The Alternative Minimum Tax, a stealth levy on the middle-class that unduly targets large families, must be repealed.
• Republicans support tax credits for health care and medical expenses.

Keeping Good Jobs in America

America’s producers can compete successfully in the international arena — as long as they have a level playing field. Today’s tax code is tilted against them, with one of the highest corporate tax rates of all developed countries. That not only hurts American investors, managers, and the U.S. balance of trade; it also sends American jobs overseas. We support a major reduction in the corporate tax rate so that American companies stay competitive with their foreign counterparts and American jobs can remain in this country.

Promoting Savings through the Tax Code

We support a tax code that encourages personal savings. High tax rates discourage thrift by penalizing the return on savings and should be replaced with incentives to save. We support a plan to encourage employers to offer automatic enrollment in tax deferred savings programs. The current limits on tax-free savings accounts should be removed.

Fundamental Tax Reform

Over the long run, the mammoth IRS tax code must be replaced with a system that is simple, transparent, and fair while maximizing economic growth and job creation. As a transition, we support giving all taxpayers the option of filing under current rules or under a two-rate flat tax with generous deductions for families. This gradual approach is the taxpayers’ best hope of overcoming the lobbyist legions that have thwarted past simplification efforts.

As a matter of principle, we oppose retroactive taxation, and we condemn attempts by judges, at any level of government, to seize the power of the purse by ordering higher taxes.

Because of the vital role of religious organizations, charities and fraternal benevolent societies in fostering charity and patriotism, they should not be subject to taxation.

In any fundamental restructuring of federal taxation, to guard against the possibility of hypertaxation of the American people, any value added tax or national sales tax must be tied to simultaneous repeal of the Sixteenth Amendment, which established the federal income tax.

The Democrats Plan to Raise Your Taxes

The last thing Americans need right now is tax hikes. On the federal level, Republicans lowered taxes in 2001 and 2003 in order to encourage economic growth, put more money in the pockets of every taxpayer, and make the system fairer. It worked. If Congress had then controlled its spending, we could have done even more.

Ever since those tax cuts were enacted, the Democratic Party has been clear about its goals: It wants to raise taxes by eliminating those Republican tax reductions. The impact on American families would be disastrous:

• Marginal tax rates would rise. This is in addition to their proposal to target millions of taxpayers with even higher rates.
• The “marriage penalty” would return for two-earner couples.
• The child tax credit would fall to half its current value.
• Small businesses would lose their tax relief.
• The federal death tax would be enormously increased.
• Investment income — the seed money for new jobs — would be eaten away by higher rates for dividend and capital gain income.
  

All that and more would amount to an annual tax hike upwards of $250 billion — almost $700 per taxpayer every year, for a total of $1.1 trillion in additional taxes over the next decade. That is what today’s Democratic Party calls ‘tax fairness.’ We call it an unconscionable assault on the paychecks and pocketbooks of every hard-working American household. Their promises to aim their tax hikes at families with high incomes is a smokescreen; history shows that when Democrats want more money, they raise taxes on everyone.”

John McCain Has a Tax Plan To Create Jobs

From the Wall Street Journal:

Sen. John McCain's tax policies are designed to create jobs, increase wages and allow all Americans -- especially those in the hard-pressed middle class -- to keep more of what they earn. His plan achieves these goals in three important ways.

First, he proposes a package of tax incentives that will create jobs and raise earnings by inducing firms to invest more in the U.S. Second, he is strongly committed to blocking any increase in tax rates while doubling the personal exemptions for families with children, which will reduce the tax burden on working Americans. Third, he proposes a new, refundable tax credit that will increase health-care coverage, reduce the cost of health care, and provide more funds for families and individuals to purchase health care.

Here's how the three components of McCain's tax plan will work in practice.

To create jobs, Mr. McCain will reduce the corporate tax rate -- now at 35% the second highest among all industrial countries -- to one that doesn't penalize firms for doing business here. To encourage small businesses to expand, he will fight against higher tax rates on their income.

To increase wages, Mr. McCain will provide incentives to raise productivity, which leads to higher wages. To increase productivity, he will provide incentives for developing and applying new technologies by expanding the tax credit for research and development, and by making that credit permanent.

More savings and investment in businesses also raise productivity. Mr. McCain will stimulate saving by keeping tax rates low on the returns to saving in the form of dividends and capital gains. He will also allow faster depreciation of assets, which encourages investment. And he will strengthen the incentive to save by reducing the maximum estate tax rate, with a substantial, untaxed exemption.

In stark contrast to Sen. Barack Obama, Mr. McCain believes that tax policy should be used to foster the creation of jobs and higher wages through economic growth, rather than to redistribute incomes. The economy is not a zero-sum game in which some people can enjoy higher incomes only if others are made worse off.

Mr. McCain's plan will significantly ease the tax burden on American families with children by doubling the personal exemption to $7,000 from $3,500. This means a larger percentage tax reduction for families with smaller taxable incomes, and specifically helps families in the middle income levels. And a President McCain will enable people to keep more of their earnings by preventing Congress from raising tax rates.

Mr. McCain's overall tax policy will also expand health-insurance coverage, and make health care more efficient. Most taxpayers will also pay less in tax. Here's how it will work. His plan includes a refundable tax credit of $2,500 for single individuals and $5,000 for couples, if they receive a qualifying health-care policy from an employer (one that includes adequate coverage against large medical bills), or buy a qualifying policy on their own. The credit will replace the current tax rule, which excludes employer payments for health insurance from employees' taxable incomes.

Is History Siding With Obama’s Economic Plan?

From NYTimes.com:

“Clearly, there are major differences between the economic policies of Senators Barack Obama and John McCain. Mr. McCain wants more tax cuts for the rich; Mr. Obama wants tax cuts for the poor and middle class. The two men also disagree on health care, energy and many other topics.

Such differences are hardly surprising. Democrats and Republicans have followed different approaches to the economy for as long as there have been Democrats and Republicans. Longer, actually. Remember Hamilton versus Jefferson?

Many Americans know that there are characteristic policy differences between the two parties. But few are aware of two important facts about the post-World War II era, both of which are brilliantly delineated in a new book, “Unequal Democracy,” by Larry M. Bartels, a professor of political science at Princeton. Understanding them might help voters see what could be at stake, economically speaking, in November.

I call the first fact the Great Partisan Growth Divide. Simply put, the United States economy has grown faster, on average, under Democratic presidents than under Republicans.

The stark contrast between the whiz-bang Clinton years and the dreary Bush years is familiar because it is so recent. But while it is extreme, it is not atypical. Data for the whole period from 1948 to 2007, during which Republicans occupied the White House for 34 years and Democrats for 26, show average annual growth of real gross national product of 1.64 percent per capita under Republican presidents versus 2.78 percent under Democrats.

That 1.14-point difference, if maintained for eight years, would yield 9.33 percent more income per person, which is a lot more than almost anyone can expect from a tax cut.

Such a large historical gap in economic performance between the two parties is rather surprising, because presidents have limited leverage over the nation’s economy. Most economists will tell you that Federal Reserve policy and oil prices, to name just two influences, are far more powerful than fiscal policy. Furthermore, as those mutual fund prospectuses constantly warn us, past results are no guarantee of future performance. But statistical regularities, like facts, are stubborn things. You bet against them at your peril.

The second big historical fact, which might be called the Great Partisan Inequality Divide, is the focus of Professor Bartels’s work.”

Sen. Joe Biden: a Deeper Look at his Tax Views

With Election Day only a few months away, both Sen. Barack Obama and Sen. John McCain have announced their running mates. Although everyone in the media is talking about Sen. Joe Biden and Gov. Sarah Palin, no one is really talking about their tax or economic views. With a looming recession, and gas prices expected to spike because of Hurricane Gustav, I decided to take a deeper look into Senator Joe Biden’s tax views.

Ending the War

One of Biden’s most progressive tax views is his adamancy about ending the war. Biden feels the sooner we end the war, the sooner we can start saving money again and reducing our national debt. Currently, the war on Iraq is costing around $100 billion a year, and Biden wants use that money to invest in our own country.

Bush Tax Cuts

The Bush tax cuts have been a large subject of debate this election season. Biden opposes the tax cuts and has voted against them recently and voted against similar tax cuts in the past when Bush Sr. was president. Although the argument has been made that the “trickle down” effect will make sure the tax cuts benefit us all, Biden claims that this tactic has not worked. “Imagine what we could do if we had a president who had the nerve and the wisdom to understand that rich folks are just as patriotic as poor folks--you just have to ask them,” claimed Biden. “I spoke to a group of millionaires about taking away their tax cut, and when I explained how I'd use it, they gave me a standing ovation.”

Health Care

Joe Biden is known for his fight for an ethical and easy health care system for America. Working closely with Social Security as well as Medicare, he has been a big part of numerous changes that have already been made to health care in this country. If elected as Vice President, Biden has claimed that he would like to work alongside Obama to strengthen prescription drug programs and make them affordable and available to everyone.

Biden recognizes that Medicare has many flaws and that it requires improvement. He would like to open programs to promote wellness and disease prevention, waive co-payments, and advance technology within the medical industry. He hopes to fund these new programs by repealing the Bush tax cuts for the top 1% and withdrawing troops from Iraq. However, there are noticeable flaws in Biden's health plans such as his neglect to recognize youth needs. Most of his plans emphasize senior health, which is important but should not be the only part of his plan.

Gas Prices

Taking on the OPEC monopoly is one of the riskier moves Biden wants to make. Some critics think this will not help but hurt the problem, as OPEC is not the only cause of high gas prices. Biden’s other energy plans are to invest in new alternative energies will be pricey at first, but have the potential to save billions in the long-run.

Education and Taxes

Biden has worked on numerous bills designer to make education more affordable, and introduced the college ACCESS legislation that provides a refundable tax credit for struggling students to help pay for tuition. The legislation also expanded grants for low-income families. To pay for the legislation Biden voted yes on shifting $11 billion from corporate tax loopholes to education.

Death Tax Exemption

While in the Senate Biden voted against raising the Death Tax Exemption from $1 million to $5 million. He felt the tax did not apply to most Americans, and only gave more money to wealthy heirs and heiresses such as the notorious Paris Hilton.

AMT Repeal

Senator Biden also voted against repealing the Alternative Minimum Tax (AMT). As we all know, the tax was originally meant to only target only the very wealthy, but is now being levied on thousands of middle class America due to inflation. However, Biden noticed that repealing it entirely would surely put us into deficit, decrease government revenue, and unbalance the budget even more. However, Biden has claimed that he would favor adjusting the ATM for inflation and the standard of living for 2008.

Balanced Budget

Sen. Biden is adamant about his fight for a balanced budget. He voted for the balanced budget amendment in 1997, and voted against making tax cuts a priority over national debt reduction in 2000. He also stated that interest rates should be lowered across the board, and that tax breaks on investment dividends should be repealed.

Hedge Funds

Biden has never been discrete about his dislike of hedge funds, and believes they are a main cause of the credit crunch in the United States. He also disliked equity funds and cites them as another cause of the country’s current financial crisis.

Foreign Aid

When the Georgia-Russia dispute first broke out, Biden immediately called for $1 billion in emergency aid. After meeting personally with Georgia’s president, he was adamant and convinced of his decision. In February of 2008, Biden also pushed for a massive increase of non-military financial aid to Pakistan.

Biden Has A Pro-Tax Career

For those of you who do not know, at the end of last week Presumptive Democratic Nominee Sen. Barack Obama announced that Sen. Joe Biden will be his Vice-Presidential running mate. Biden is the current chairman of the Senate’s Foreign Relations Committee and actively worked on military resolutions concerning the former Yugoslavia, Georgia, and Iraq.

Many assume that Biden’s history of dealing with foreign relations and military resolutions will help ease concerns over Obama’s “lack of experience.” However, in addition to his foreign relations background Biden also has an interesting history on tax related issues. CNSNews.com has posted this interesting article on Sen. Joe Biden’s tax history, below is a snippet from the article.

“Like most Senate Democrats in 1981, Sen. Joe Biden of Delaware found President Reagan’s tax cut proposal to be an irresistible force and voted for it, after having twice voted for efforts to limit its scope.

Since then, with a few exceptions, Biden usually has supported higher taxes, although he has voted against specific tax increases when they have been advanced by Republican presidents.

In 1981, when President Reagan was pushing for across-the-board-tax cuts, Biden twice voted for bills that would have curtailed the effect of Reagan’s proposal.

First, on July 16, 1981, he voted against a measure that called for indexing the income-tax rates to inflation beginning in 1985. In a July 17, 1981 story, The Washington Post reported that the purpose of the bill was “to offset the tax increases that otherwise occur inexorably each year as incomes rise with inflation, lifting people into higher tax brackets.”

Then, on July 23, 1981, Biden supported an amendment sponsored by Sen. Bill Bradley (D-N.J.) that would have rolled back the tax cuts for anyone making over $50,000 per year. On July 17, 1981, the New York Times explained that the purpose of this amendment was “to limit personal income-tax relief to one round of rate cuts and to tilt the relief toward those who earn less than $50,000 a year.”

Nonetheless, when the full Reagan tax cuts came up for a final vote, Biden voted in favor of them, as did 88 of his Senate colleagues. Only 11 Senators voted against the Reagan bill, including 10 Democrats and 1 Republican.

The next year, Biden cast an ironic vote against a $98.3 billion tax increase supported by President Reagan and pushed through the Senate by Sen. Bob Dole (R-Kan.). The bill passed the Senate 52-47, with 35 other Democrats joining Biden in voting against it.”

The Biden Economy: What Obama’s VP Pick Means for Wall Street

From Heidi N. Moore of the Wall Street Journal:

Sen. Barack Obama picked Delaware Senator Joe Biden as his running mate in a 3 AM pick Saturday that gave a new meaning to the “Friday night news dump.”

Biden’s foreign-policy experience made him Obama’s choice, according to the news reports. But what are Biden’s views on the economy, taxes, deal making and Wall Street? Deal Journal took a look.

Not a fan of hedge funds:

In a Democratic primary debate on This Week last year, Biden blamed hedge funds and private-equity funds for the credit crunch: “We need more transparency, particularly with regard to hedge funds and private equity funds. They are the ones that are causing this thing to go under. And there’s no transparency, no accountability. We don’t know how deep this problem is.”

A stable capital-gains tax:

Biden voted no to cutting the capital-gains tax rate in 2005 and 2006. Obama favors imposing an income-tax regime on investment profits from private-equity firms and hedge funds that are currently taxed as capital gains. In 2003, the capital-gains tax rate was cut to 15%. Biden believes raising taxes on dividends will raise $195 billion a year.

Caution, but not rejection, of sovereign-wealth funds:

Biden led Senate hearings in June on sovereign-wealth funds and urged caution when accepting investments from the investment arms of foreign countries, particularly very large funds such as Saudi Arabia’s planned $900 billion fund and the $200 billion China Investment Corp. Still, he credited SWFs with helping several U.S. banks, including Citigroup, which received a $7.6 billion investment from the Abu Dhabi investment authority: “From the financial perspective, however, these funds could be an important source of capital in our global economy. Wealth Funds can bring benefits to our economy. They have helped keep our banks afloat in the midst of the sub-prime mortgage crisis and ensuing credit crunch. They could offer a fresh infusion of capital, fuel employment and stimulate the U.S. industry.” Biden said greater transparency wouldn’t make sovereign-wealth funds appear less-threatening to U.S. national security interests, but that “punitive defensive regulation could be self-defeating, depriving us of potential benefits out of the fear of potential harm.”

No tax breaks for anyone earning more than $1 million:

Sorry, Wall Street. Those deal makers who are still employed will surely pay higher taxes in an Obama-Biden administration. Biden has said he supports the elimination of tax cuts for anyone earning more than $1 million a year; he expects that to raise $85 billion a year for the government.

Toeing Obama’s line on NAFTA:

In a debate broadcast on National Public Radio in December, Biden said, “the thing I’m most unsure about, is how you rationalize competition and trade policy. I think that’s the single most difficult challenge that I will have as president.” More recently, Biden has supported Obama’s view that the North American Free Trade Agreement – which governs $810 billion in trade – should be renegotiated along more favorable lines for the U.S.

He was saw early on that the credit crunch would get ugly: in that same Democratic primary debate in August 2007, Biden said the then-nascent credit crunch was “almost as deep in terms of dollars, not liability, as the savings-and-loan crisis.”

Obama Announces Revised Tax Plan

Presidential hopeful, Sen. Barack Obama released a new version of his tax plan. Possibly due to negative media attention, Obama has decreased his ambitions for a large capital gains tax increase. Instead of doubling the capital gains and dividends tax rate, his new plan seeks to only raise it to 20% for families making over $250,000. Below is the summary of his new plan, but you can download the full version at BarackObama.com.

“Barack Obama’s tax plan delivers broad-based tax relief to middle class families and cuts taxes for small businesses and companies that create jobs in America, while restoring fairness to our tax code and returning to fiscal responsibility. Coupled with Obama’s commitment to invest in key areas like health, clean energy, innovation and education, his tax plan will help restore bottom-up economic growth that helps create good jobs in America and empowers all families achieve the American dream.

Obama’s Comprehensive Tax Policy Plan for America will:

• Cut taxes for 95 percent of workers and their families with a tax cut of $500 for workers or $1,000 for working couples.
• Provide generous tax cuts for low- and middle-income seniors, homeowners, the uninsured, and families sending a child to college or looking to save and accumulate wealth.
• Eliminate capital gains taxes for small businesses, cut corporate taxes for firms that invest and create jobs in the United States, and provide tax credits to reduce the cost of healthcare and to reward investments in innovation.
• Dramatically simplify taxes by consolidating existing tax credits, eliminating the need for millions of senior citizens to file tax forms, and enabling as many as 40 million middle-class Americans to do their own taxes in less than five minutes without an accountant.

Under the Obama Plan:

Middle class families will see their taxes cut and no family making less than $250,000 will see their taxes increase. The typical middle class family will receive well over $1,000 in tax relief under the Obama plan, and will pay tax rates that are 20% lower than they faced under President Reagan. According to the Tax Policy Center, the Obama plan provides three times as much tax relief for middle class families as Sen. John McCain’s plan.

Families making more than $250,000 will pay either the same or lower tax rates than they paid in the 1990s. Obama will ask the wealthiest 2% of families to give back a portion of the tax cuts they have received over the past eight years to ensure we are restoring fairness and returning to fiscal responsibility. But no family will pay higher tax rates than they would have paid in the 1990s. In fact, dividend rates would be 39 percent lower than what President Bush proposed in his 2001 tax cut.

Obama’s plan will cut taxes overall, reducing revenues to below the levels that prevailed under Ronald Reagan (less than 18.2 percent of GDP). The Obama tax plan is a net tax cut – his tax relief for middle class families is larger than the revenue raised by his tax changes for families over $250,000. Coupled with his commitment to cut unnecessary spending, Obama will pay for this tax relief while bringing down the budget deficit.”

Bogus Obama E-mail Lies Corrected

Over the past few weeks an email has been going around filled with lies about Obama’s tax and economic proposals. Thanks to the Tax Policy Blog, we have a full list of these bogus claims, and the real truth about them.

Obama would tax capital gains on ALL home sales at 28 percent

Obama's plan (like McCain's) does not change the tax treatment of capital gains on owner-occupied housing (I wish it did). Obama does plan to raise the rates on long-term capital gains that are currently taxed at preferred rates.

Obama would raise the tax rate on dividends to 39.6 percent

Merely repealing the Bush tax cuts (or allowing them to expire) would raise the dividend tax rate to 39.6 percent for those in the top income bracket (about 1 percent of tax returns, though a large share of dividends). However, Obama has indicated that he would apply the same tax rate on dividends as capital gains, which he has indicated would not exceed 28 percent.

Income tax bills for typical families would increase, even double for some

As discussed earlier... Same as here. "Clinton-era" tax law assumed to be the same as Obama. But figures cited are wrong for many reasons.

Inheritance Tax under McCain = 0; Obama restored

Actually, McCain does not favor permanent repeal of the estate tax. And Obama does not want it fully restored. Obama would impose a 45 percent tax rate with $3.5 million exclusion, which is lower than pre-Bush tax cuts, yet significantly higher than 2010 scheduled law ($0).

Obama would impose new government taxes on homes that are over 2,400 square feet

This is the most outrageous claim. This appears to stem from Congressman John Dingell's proposal that would cap the mortgage interest deduction for large houses for environmental purposes. Obama has not favored such a proposal and even if he did, it would not be a new "tax" per se, just a limitation of what I would call an already bad tax provision (MID). Obama does favor a cap-and-trade system (like McCain), which is in implicit tax, but such an implicit tax would hit all homes indirectly based largely upon energy consumption.

Obama would impose new gasoline taxes

Ambiguous...Obama does favor a windfall profits tax on oil companies, which would likely raise the price of gasoline. However, he has not indicated support of raising the federal excise tax on gasoline (currently 18.4 cents).

Obama would impose new taxes on natural resource consumption (energy, natural gas, etc.)

Obama does not favor any direct tax on these products (except for windfall profits tax on oil companies). However, again, a cap-and-trade system would act as an implicit tax on these oil companies, so this is not too outlandish of a claim (compared to the rest of them). It should be pointed out though that McCain supports practically the same policy.

New taxes on retirement accounts

Obama has not said anything about a new tax on retirement accounts, unless one wants to argue that indirectly, he would affect the return on retirement accounts through his individual and corporate tax policies and dividend/capital gains policies. In fact, when it comes to direct taxes on retirement, Obama has proposed exempting seniors (those who most likely claim retirement income) who make under $50,000 from an income tax.

New taxes to pay for socialized medicine

Obama does have a universal health care plan that one could label socialist to some extent, although our current system has a large degree of implicit government payments through the exclusion of employer-provided health insurance. However, Obama has not said new taxes would pay specifically for that socialized medicine although he does favor some new taxes (higher income taxes on upper-incomes, higher payroll taxes on upper-income workers and a windfall profits tax). Such a claim is not possible to verify or refute due to the fact that all government money is basically fungible.”

Regardless of who wins in November, taxes will change

Earlier today, I came across this interesting article on KansasCity.com, while I was reading the latest news about the presidential campaigns. The author correctly argues one main point - that no matter who becomes our next President there will need to be changes to our current tax system.

“The fact that President Bush and Congress enacted temporary tax cuts in 2001 and 2003 that expire at the end of 2010 means it's inevitable that taxes will change, perhaps dramatically.

The next president and Congress will agree to extend some or all of those tax cuts while also cutting or raising other taxes - or else political gridlock will stymie agreement, the tax cuts will expire, and tax bills will go up for almost everyone.

‘It is a unique moment,’ said Robert Reischauer, a former director of the Congressional Budget Office. ‘Something has to happen.’

But what? Who will pay less and who will pay more? Which plan will get through a Congress all but certain to remain in Democratic control? The likeliest ideas to make it through are those few changes that Democrat Barack Obama and Republican John McCain both want.

They both want to extend the Bush tax cuts for those making less than $250,000 - mainly the $1,000 per child tax credit, lower income tax rates and elimination of the marriage penalty.

‘There's a good chance that whoever the next president is, the Congress will agree to extend the middle-class tax cuts,’ said Leonard Burman, director of the Tax Policy Center, a joint operation of the Urban Institute and Brookings Institution that analyzes taxes. Both are center-left think tanks.

"The candidates want it and majorities in both houses of Congress favor it," Burman said. Beyond that, however, Obama and McCain differ greatly.”

Presidential Tax Views Quiz

Embedded below is an easy quiz that will help you determine which Presidential candidate your tax views align with, Sen. Barack Obama or Sen. John McCain. When you begin the quiz, it will show you a series of tax related statements that you can either agree or disagree with. At the end, the quiz will tell you which candidate your tax views are more aligned with.

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