Issue 2.2: The Economy

I know many of us are tired of the economic debates, but our friends at the Tax Policy Center have recently published their analysis of the candidates' newest tax proposals (see Issue 2.1) and I thought I'd share. Besides, their analysis is pretty grim for Obama so I thought that might lift the spirits of our McCain-inclined readers as well as provide a bit of balance to the C.Post.

In order to make this as quick and painless as possible, I'll quickly outline each candidates' ideas again and include what the Tax Policy Center has to say about them.

Both Candidates

• No federal taxes on unemployment insurance benefits - TPC says this would mostly benefit unemployed workers who have substantial "other" income. Doesn't really help the people who need help.

Obama

• Remove penalty for early withdrawal from retirement accounts - TPC says encouraging people to withdraw money from their retirement accounts to pay the bills today is dangerous and wouldn't help people in the long run. They also say it would encourage people to withdraw money while that money is temporarily worth less--doesn't really make sense.
• Give companies $3,000 per new employee they hire - TPC says this would mostly benefit companies in already-expanding industries and wouldn't do much to help companies that are hurting.

McCain

• Suspend rules requiring 70.5 year-olds to pull money out of their IRA - TPC says this would largely benefit the wealthy because they 1) gain more from tax deferral and 2) are in the best position to use other money to live besides their IRA.
• Lower the tax rate on IRA and 401(k) withdrawals - TPC says the benefit goes largely to those in the highest tax bracket.
• Lower the tax rate on long-term capital gains - McCain camp says the purpose is to encourage investment, TPC says it wouldn't work and would instead give people who already have investments an incentive to sell them now instead of later.

I know that's entirely too much tax jargon, but I think the gist is this: Obama's ideas wouldn't really work and McCain's ideas would benefit people who don't really need help. Tough choice. The good news is the entire TPC report is only 5 pages long. If you want to read it, click here.