Massive bailouts, foreclosed homes, jaw-dropping gas prices, chaos on Wall Street. These are just a few signs of the U.S.'s struggling economy. As America enters the next chapter of its history, what impact will an Obama administration have on our economic future?
Jason Furman, Economic Advisor
Both Barack Obama and John McCain support tax cuts. The big difference is who these tax cuts are for. Barack Obama believes in tax cuts for ordinary Americans to help reward work, promote savings, afford college and own a home. John McCain believes in tax cuts for the affluent and corporations. After McCain's plan spends trillions on this purpose -- including a $1.2 billion annual tax cut for Exxon-Mobil alone -- he has virtually nothing left for middle-class families.
Both Senator McCain and Senator Obama support continuing the current provision that largely eliminates the Alternative Minimum Tax (AMT) for most middle-class families . But this does not cut taxes relative to where they are this year. McCain, however, goes further and proposes to spend another $391 billion (more than enough to provide health insurance for every child in America) on eliminating the AMT -- a policy that almost entirely benefits the wealthy.
The McCain campaign is correct that raising the dependent exemption is a middle-class tax cut. But it's also a tiny middle-class tax cut. In sum, 101 million families would be left out, including 67 million households currently paying income taxes but without dependents and 34 million households with incomes too low to qualify for this tax break. A family of four that is lucky enough to get the tax cut would receive only $125 in the first year. This is far less than Barack Obama's proposal to cut taxes for this family by more than $1,000 -- paid for by restoring fairness and balance to the tax system.
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