Guest Post: Tax and the Candidates

This post comes from Taxgirl host, and B5 Business Channel Editor, Kelly Phillips Erb as part of the b5mdia Business Channel’s April Scramble.

What’s more fitting on Tax Day than a guest post about taxes? And what would be even better on Tax Day for a politics blog in an election year than a guest post about taxes and candidates?

And since I’m a tax attorney, I have to have a disclaimer even before I start. And here it is: Presidents may direct policy but they don’t make legislation (oh c’mon, you knew that part already). So for all that the candidates tout their fiscal plans, the reality is the details – no matter how far apart now – will really be driven by Congress. And only if Congress aligns itself politically with the President, which doesn’t happen terribly often, will the President be able to push through the tax policy that he – or she – wants.

So what do the candidates claim that they would do if elected?

Here’s the rundown of the highlights of the candidates’ respective tax policies:

Image details: Hillary Clinton Campaigns In Philadelphia With Mayor Nutter served by picapp.com

Hillary Rodham Clinton

Clinton would allow Bush’s income tax cuts to expire for those making more than $250,000 but extend middle class tax cuts.

Clinton would extend also extend the child tax credit and marriage penalty relief.

Clinton specifically plans to reform the AMT (Alternate Minimum Tax) so that the middle class would not be affected. I predict that this will be nearly impossible – Congress has shown in 2007 that they really don’t want to address it.

Clinton would create a $3500 college tax credit. I’m not clear on the specifics of the tax credit but often, these credits are only valuable to those who itemize (i.e. not students and those just out of school).

Clinton would create a refundable health care tax credit to cover the costs of care – including insurance – and introduce a similar credit for small businesses that provide health insurance.

(source: HillaryClinton.com)

Image details: John McCain Speaks At Associated Press Annual Meeting served by picapp.com

John McCain

McCain also plans to eliminate the AMT. As with Clinton’s plan, I don’t anticipate that this will happen.

McCain claims that Democrats will raise taxes in 2011 and vows to stop it. What he is really saying is that he wants to make the tax cuts permanent for all taxpayers (as opposed to Obama and Clinton who would only extend cuts for the lower and middle class).

McCain would make it harder to pass tax cuts in Congress, requiring a 3/5 majority vote before the legislation would be approved.

McCain would lower corporate taxes from 35% to 25%.

McCain would seek to permanently ban internet and new cell phone taxes.

(source: JohnMcCain.com)

Image details: Obama Attends Town Hall In Gary, Indiana served by picapp.com

Barack Obama

Obama would create a refundable tax credit that would offset payroll taxes on the first $8,100 of earnings. That essentially means that about half of the wages for those making the federal minimum wage would be payroll-tax free.

Obama will reverse most of the Bush tax cuts for the wealthiest taxpayers. Those cuts are set to expire in 2010 – Bush wants to make them permanent but it’s unlikely that will happen during his administration. Obama will extend the cuts for the middle and lower class.

Obama would create a $4000 college tax credit to help pay for education, similar to the one proposed by Clinton.

Obama claims that he will assist the Treasury Department to work to stop the abuse of tax shelters and offshore tax havens. This could be a good way to boost revenue (to the tune of $350 million) without raising taxes.

Obama will also target the elimination of corporate loopholes and special tax incentives for groups such as the oil and gas industry.

(source: barackobama.com)

So, assuming that any of the candidates actually accomplish what they’re planning… which has the better plan? Do the tax strategies and plans make any difference as to your candidate preference? Is there something missing from the list?

Kelly Phillips Erb is a tax attorney who loves tax and politics – and writes taxgirl for b5media.