Issue 1: Taxes

For most of us, they're one of the most boring and least enjoyable things to talk about--and pay. But taxes affect our paycheck probably more than anything else that politicians do, so let's talk about them. We'll get through it, I promise.

First, a very brief education on taxes; namely, the difference between "deductions," "exemptions" and "credits." Deductions and exemptions lower your taxable income; credits lower your tax bill. Here's an example. Let's say I make $1,000, and my tax rate is 10%. Without any deductions or credits, I'd owe $100 in taxes. A $200 deduction would lower my taxable income to $800 and I'd owe $80 in taxes. A $200 credit would lower my original tax bill of $100 to either $0 (if it's a "non-refundable" credit) or make the government owe me $100 (if it's a "fully-refundable" credit). Make sense? Not so bad, right?

Okay, now that that's out of the way, let's talk Presidential tax policies. If your family makes less than $250,000 per year ($200,000 for un-weds) and you vote for either Obama or McCain, you're voting for a lower tax bill. Both candidates want to continue President Bush's tax cuts for people with the income levels we're talking about. They also both want to make fewer people get nailed by that pesky AMT. However, if you vote for Obama, then you're actually voting for a lower tax bill than if you vote for McCain.

Here's why. Aside from the stuff above, Obama also wants to give people more deductions and credits than McCain does. For example, Obama wants to give you a $500 credit for working, expand the one you get for having kids and expand the one you get if you make very little money at all. He also wants to turn the mortgage interest deduction into a credit and make it refundable and turn the non-refundable credit you get for paying for college into a fully-refundable credit and increase the amount of money you can receive. There's more, but I think that's enough for now.

What about McCain? Aside from continuing Bush's tax cuts and the AMT thing, McCain wants to increase the exemption you get for having kids and other dependents. McCain currently offers no other forms of additional tax relief for people with these income levels.

Now, what if you make more than $250,000? Well, then your tax bill goes in different directions depending on your vote. Vote for McCain and it'll go down; vote for Obama and it'll go up. Two reasons why: 1) McCain wants to continue President Bush's tax cuts for these people, too; Obama doesn't and 2) McCain wants to lower estate taxes (taxes your "estate" pays after you die) more than Obama does.

Translation? McCain's tax cuts mostly benefit those people with relatively high incomes and do not do as much for people with lower incomes. Obama's tax cuts, on the other hand, offer much larger tax breaks to low- and middle-income taxpayers and would increase the tax bills of high income taxpayers.

Sound different then what you've heard on TV? Well, that's American politics for you. Gotta love it. Hope this helps clear up any confusion. If you want to know more, check this out.