- Cut taxes by up to $1,000 for families making $75,000 a year or less. [1,2,3]
- Don't increase taxes for families making $200,000 or less. [4]
- Increase taxes on capital gains investments for people making more than $250,000 a year from the current 15% rate to at most the 28% rate it was under Bill Clinton. [2,5]
- Close corporate tax loopholes. [1,3]
Senator Obama:
The numbers don't lie. At a time when income inequality is growing sharper, the Bush tax cuts gave the wealthiest 1 percent of Americans a tax cut that was twice as large as the middle class. At a time when Americans are working harder than ever, we are taxing income from work at nearly twice the level that we're taxing gains for investors.Talk about this in polite company, and sooner or later you'll get accused of waging class warfare. As if it's distasteful to point out that some CEOs make more in ten minutes than a worker makes in ten months. Or, as my friend Warren Buffet put it to me - "If there's class warfare going on in America, then my class is winning."...
I'll end the preferential treatment that's built into our tax code by eliminating corporate loopholes and tax breaks. We shouldn't be distorting our tax code to benefit a few powerful interests - we should be insisting that everyone pays their fair share, and when I'm President, they will.
And it's time to shed some sunlight not only on companies that abuse the tax code, but also on the secretive offshore tax havens that shelter them. We'll create a list of countries where tax evaders hide their income and cost America untold billions of dollars every year. We'll lead the international community to new standards of information sharing. And we'll penalize companies and individuals who use those havens and illegally evade their tax obligations...
I'd reward work by providing an income tax cut of up to $500 per person - or $1,000 for each working family - to offset the payroll tax that they're already paying... Under my plan, 150 million Americans - and their families - will get a tax cut. And because this credit would be greater than their income tax bill, my proposal would eliminate all income taxes for 10 million working Americans. [3]
Obama quotes billionaire Warren Buffet, whose income is almost all from investments, further in his book "The Audacity of Hope":
Though I"ve never used tax shelters or had a tax planner, after including the payroll taxes we each pay, I'll pay a lower effective tax rate this year than my receptionist. In fact, I'm pretty sure I pay a lower rate than the average American...Some of that wealth has to be plowed back into education, so that the next generation has a fair chance, and to maintain our infrastructure, and provide some sort of safety net for those who lose out in the markey economy. And it just makes sense that those of us who benefited most from the market should pay a bigger share. [6]
In "The Audacity of Hope" Obama goes on to say:
Between 1971 and 2001, while the median wage and salary income of the average worker showed literally no gain, the income of the top hundredth of a percent went up almost 500 percent. The distribution of wealth is even more skewed, and levels of inequality are now higher than any time since the Gilded Aga... Bush's tax cuts made them worse. [6]
Some critics of Obama's proposal to increase capital gains taxes back up to levels they were in the Clinton era argue that increase capital gains taxes results in decreased federal tax realizations due as a result of decreased investment activity. The U.S. Congressional Budget Office, however, has concluded:
The relationship of realizations and receipts to gains tax rates is neither predictable nor obvious. [7]
Brookings economist Douglas Elmendorf on Obama's tax plan:
"It's very clear that taxes for lower income Americans will decline under Obama." [8]
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Will Obama's tax plan lower or raise taxes?
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Get the facts at McCain Fact Check.
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[1] BarackObama.com. Economy: Provide Middle Class Americans Tax Relief
[2] CNBC.com. Closing Bell March 27, 2008
[3] CNN.com. Obama's September 18, 2007, speech on middle class tax fairness September 18, 2007
[4] ABC News. Transcript: Obama and Clinton Debate April 16, 2008
[5] FactCheck.org. Would raising the capital gains tax rate hit the middle class?
[6] Obama, Barack. The Audacity of Hope Crown Publishers, 2006, p 190-3.
[7] Congressional Budget Office. Capital Gains Taxes and Federal Revenues October 9, 2002
[8] Dobbs, Michael. The Fact Checker. McCain vs Obama on taxes Washington Post. June 11, 2008
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Additional Resources:
OnTheIssues.org: Barack Obama on Tax Reform
Politifact.com: Dems don't propose tax increases on lower incomes
Politifact.com: Capital gains taxes demystified
