With the recent bailouts of Wall Street companies totaling close to a trillion dollars and the country spending $1.79 billion per day, and foreclosure rates that are surpassing the rates from Great Depression. Both presidential candidates are attempting to convince Americans that they have the skills to fix it.
John McCain, presidential nominee for the Republican Party, and Barack Obama, presidential nominee for the Democrat Party, have formulated tax plans that offer different approaches to fix the “loopholes” in the economy.
However, both candidates have called for more regulation and security on Wall Street to avoid future bailouts for private companies.
McCain’s plan includes cutting the estate tax, eliminating the Alternative Minimum Tax, doubling the $3,500 child tax deduction for every dependent. McCain wants to provide refundable tax credits of $2,500 for singles and $5,000 for families who opt to purchase health insurance, which he plans on privatizing.
Ruben Betancourt, Director of Communications for the Florida Center for Fiscal and Economic Policy, said McCain believes in a classic republican econiomic policy.
“When Reagan took office, he implemented the idea of trickle-down-economics. He believed that if the wealthy received more money, they would invest more into economies and that would ultimately lead to more jobs for the middle and working classes.”
Obama’s plan beckons for a $50 billion stimulus package that would give energy rebate checks for families, so that it will offset foreclosures and provide assistance to states hit hard by economic setbacks. He also wants to eliminate income taxes for retirees making less than $50,000 a year, initiate automatic 401(k) s and IRAs, offer income-related subsidies for health insurance and expand child and dependent care tax credits.
Obama plans on making permanent provisions to President George W. Bush’s tax cuts but would allow other aspects of the cuts to expire for taxpayers earning more than $250,000.
“You’re going to have an tax increase because people who pay one level will end up paying a higher level in the future and that will have a negative effect on the economy,” said Black Enterprise’s Michael Tanner, a senior fellow at the Cato Institute, a nonprofit public policy research foundation.
“The theory is that people faced with higher taxes will invest less and do less to create jobs, and that will create problems,” Tanner said.
Tanner also mentioned that McCain’s corporate tax cuts would encourage economic growth and job creation.
To the contrary Demetrius Pettaway, a financial specialist at Wachovia believes that allowing the Bush tax cuts to remain permanent could increase the national deficit.
“Though the country needs to do something to promote economic growth, corporations have already had enough tax cuts under Bush, and this week along has proven that they don’t work,” Pettaway said.
“All in all, McCain’s plan clearly benefits high-income individuals and businesses whereas Obama’s plans are tailored for those who earn lower incomes,” Betancourt said.