TheCatSite.com › Forums › General Forums › IMO: In My Opinion › Compare the economic plans of the candidates
New Posts  All Forums:Forum Nav:

Compare the economic plans of the candidates  

post #1 of 22
Thread Starter 
A nice clear summary comparing the two: http://elections.nytimes.com/2008/pr...s/economy.html

What I don't see from either candidate is how they're going to pay for everything. From an economic perspective, Obama's seems more comprehensive in terms of providing economic stimulus as opposed to fiscal stimulus, and I don't see the risk to small business.

Laurie
post #2 of 22
I am not an economics guru at all, so if someone can explain this to me I would appreciate it.

Does either plan call for balanced budgets and decreasing the national debt long term? Laurie I read the other link you posted and understood about 1/4 of it. I think it said both plans were not balanced, but Obama's overall was less expensive than McCain's.


Also, McCain keeps talking about cutting earmarks but just how is this going to get done? He has been working at getting this done for years and nothing ever changes. The recent bailout was stuffed full of pork.

I am not understanding how his economic plan can be based on something that has been unattainable, though many have been trying. I have to be missing something here.

This issue is really important to me, but I just don't get economics.
post #3 of 22
Thread Starter 
Neither candidate has laid out how they actually plan to pay for everything they propose (that I have found yet), and most everything (or everything?) they propose has to be passed by congress first.

Tax plans: Obama wants to tax the rich more, McCain wants to provide incentives on certain types of capital spending (not outlined what in the article).

Economic Stimulus: both proposals are targeted at creating job growth. Obama's through helping auto industry and public works and direct incentives to employers, while McCain's are targeted at auto and nuclear industry.

Mortgage Crisis: Obama's plan makes the company's eat the problem, McCains makes the taxpayers eat the problem.

Both want to make money from 401(k)s and IRAs more readily available to people.

McCain also wants to reduce long term cap gains tax and dividend tax. This is never good for the markets short term.

Laurie
post #4 of 22
Quote:
Originally Posted by LDG View Post

McCain also wants to reduce long term cap gains tax and dividend tax. This is never good for the markets short term.
I heard an interesting perspective on this topic on the drive to work (NPR). What they stated was that he wanted to raise the capital gains income adjustment from $3,000 annually to $15,000 annually, in effect, allowing for people that make a lot of money on Wall Street to reduce their income. The problem is, with the crash, no one is actually making a gain right now so there won't be any effect on the economy.

I'm not a financial wizard by any means, but I am going to take the time to try to understand the plans. Thanks again for posting Laurie!
post #5 of 22
Thread Starter 
Amy, apparently these are two different things, because he was also talking about reducing the long term gains tax from 15% to 7.5%. So people like my Dad, who was gifted a position in Exxon (now Exxon Mobile) from my grandmother a million years ago and have an effective cost basis of 0 would be able to sell those positions without the higher tax implications. We manage their equity portfolio, and they're tax-sensitive, so we can't sell a lot of stuff that we would otherwise want to, because it has become outweighted as a % of the assets, and if we could, we would want to trim some of those positions. A 7.5% long term capital gains tax would make that a lot more palatable. So any time the LT gains tax gets reduced, it brings out a lot of selling (short term) that didn't exist before.

Laurie
post #6 of 22
Thank you Laurie. Now I am going to go back and re-read each plan and see if I can make better sense of things. Hopefully tonight's debate will also provide some answers.
post #7 of 22
You know what I wonder about sometimes? I know that a lot of people keep money invested thru their 401Ks, but wouldn't necessarily draw out of it until they are retired and in a lower income bracket. How many middle class citizens play the stock market and would have any relief from capital gain tax relief? I know that it's more than the stock market that enables gains, but with housing prices dropping, the days of gains on real estate are probably gone for a long time.

I just see this entire capital gains relief as being geared towards the wealthy, and leaves middle and lower class people behind.
post #8 of 22
Thread Starter 
Quote:
Originally Posted by Momofmany View Post
You know what I wonder about sometimes? I know that a lot of people keep money invested thru their 401Ks, but wouldn't necessarily draw out of it until they are retired and in a lower income bracket. How many middle class citizens play the stock market and would have any relief from capital gain tax relief? I know that it's more than the stock market that enables gains, but with housing prices dropping, the days of gains on real estate are probably gone for a long time.

I just see this entire capital gains relief as being geared towards the wealthy, and leaves middle and lower class people behind.
Yes, that is generally the case.

However, part of McCain's issue is that with IRAs you are required by law to start drawing down part of the assets at - age 72 1/2? Something like that. He wants to remove the mandatory withdrawals. I'm not quite sure what that does, except help people who don't need the money.

Laurie
post #9 of 22
Quote:
Originally Posted by LDG View Post
However, part of McCain's issue is that with IRAs you are required by law to start drawing down part of the assets at - age 72 1/2? Something like that. He wants to remove the mandatory withdrawals. I'm not quite sure what that does, except help people who don't need the money.
Or maybe because he'll be 72-1/2 in a few months and doesn't want to start withdrawing?

Sarcasm aside, it does appear to help people that are wealthy enough to not need the money.
post #10 of 22
Wouldn't it keep the money in the system longer, thus making it available for banks to use? As opposed to being in someone's possession....
post #11 of 22
Quote:
Originally Posted by neetanddave View Post
Wouldn't it keep the money in the system longer, thus making it available for banks to use? As opposed to being in someone's possession....
I don't know if this is true across the board, but my 401K is managed by an investment firm, not a bank. The investment firm is part of Wall Street, and unless things change drastically, I'm not sure that I trust them right now with my retirement money. I'm not sure that I understand where you were going with your comment about money being available to banks. Can you elaborate your thoughts?
post #12 of 22
Thread Starter 
401(k)s and IRAs when managed by professionals usually only have 3% - 5% of their assets in "cash". So the idea is to not have to withdraw the money and pay the tax on it because of the forced withdrawal. I guess older relatively wealthy people are a large part of the voter block now - our population is aging after all!

Laurie
post #13 of 22
Quote:
Originally Posted by Momofmany View Post
I don't know if this is true across the board, but my 401K is managed by an investment firm, not a bank. The investment firm is part of Wall Street, and unless things change drastically, I'm not sure that I trust them right now with my retirement money. I'm not sure that I understand where you were going with your comment about money being available to banks. Can you elaborate your thoughts?
Well, I meant banks, financial institutions, whoever has the 401k monies. They use that money (whether real or on paper) to make loans, etc. If everyone withdrew their monies, there could be a rush on cash, or there'd be nothing for them to loan (on paper.)
post #14 of 22
Thread Starter 
Quote:
Originally Posted by neetanddave View Post
Well, I meant banks, financial institutions, whoever has the 401k monies. They use that money (whether real or on paper) to make loans, etc. If everyone withdrew their monies, there could be a rush on cash, or there'd be nothing for them to loan (on paper.)
It isn't correct that they can use that money to make loans. Accounting in banks is counter-intuitive. Deposits or investment accounts by individuals are liabilities to a bank on its balance sheet. Securities accounts (IRAs or 401(k) accounts) are simply income-producing vehicles for them. Cash accounts and deposits, on the other hand, they can loan against, and typical managed accounts carry just 3% - 5% "cash" (money market accounts or whatever).

The current mandatory withdrawals applies to IRAs, and at 72 1/2, it is mandatory that some specific amount is withdrawn every year (depending on amount in/value of IRA). So removing the mandatory withdrawal requirement doesn't prevent a run on cash or the accounts - right now people are required to take it out. It would allow people to choose whether or not they withdraw the money once they reach 72 1/2 instead of forcing them to take it out. So for instance, if a retired person has a comfortable income from some other source - a job, some other portfolio that provides them with enough dividend income to live off of, whatever, if they're forced to make a withdrawal from their IRA, that could potentially push them into a higher tax bracket than they would be otherwise (I think). So by having the choice not to manditorily withdraw money each year, they can "push out" the tax bill that would otherwise come due.

It also means that people who are 72+ and have another source of income aren't going to be forced to withdraw money from accounts that may be down 30% - 40% from their valuations last year - which, right now are just paper losses - but if forced to sell, would become realized losses.

Laurie
post #15 of 22
Check out what your taxes will be for yourself. Go to http://www.irs.gov/formspubs/ and use this year's salary for 2007 and back to 2000, the year BHO will use as a benchmark when he rolls back the Bush tax cuts. By allowing those to roll back, its a 100% increase for all taxpayers.

That's lie #1.

#2. His plan to increase SS funding by $1 billion: can't do it. He even had some crazy idea about adding in a "donut" to expect people under $250k, he removed that from his website.

#3. Capital gains tax increase. He's aiming for the fat cats above $250k, but over 50% of American have capital investments. That's an increase in taxes for 50% of Americans.

#4. Pass-through taxes. Corporations don't "pay" taxes -- they collect taxes from customers and pass them along to the government. You can see stores add the sales tax, but when a corporation's own taxes go up, you don't see it -- its automatic -- but they do the same thing.
post #16 of 22
And more reading material... http://www.heritage.org/Research/Economy/wm2101.cfm

As expressions of tax policy design, the two tax plans share the unfortunate attribute of adding to tax complexity. In other respects, the McCain proposal significantly advances good tax policy by emphasizing lower rates while the Obama plan raises tax rates. The Obama plan also suffers in its proliferation and expansion of refundable tax credits, further (and inappropriately) using the income tax system as an income support system.

The Heritage Foundation's Center for Data Analysis (CDA) has a detailed overview of the two plans and an assessment of their economic effects.[1] According to CDA, by 2018 the economy would be more than $320 billion larger (after inflation), and average household income would be more than $2,600 greater under the McCain plan than under the Obama plan.

Through the lens of sound tax policy, both McCain's and Obama's tax plans would leave the tax code more complicated than it is today. Even so, McCain's plan has important advantages through its focus on keeping tax rates low--and lowering them further in some instances--while improving incentives for investment and correcting an extremely harmful tax distortion at the heart of much of the trouble in America's health care financing system.

In contrast, the Obama plan raises income tax rates, raises payroll taxes on a delayed basis, and actively increases the use of the tax system to redistribute income to those who pay little or no income tax. Each of these aspects move the tax code in a decidedly inappropriate direction.




And this from the same site http://www.heritage.org/Research/taxes/cda08-09.cfm
post #17 of 22
Obama wants to redistribute the wealth. Simple as that.
He has said it many times and he will do it if elected.
I do not want any of my money redistributed. Enough of it is redistributed as it is, no more.

He can redistribute his own money not mine. Who does he think he is anyway? That he can take money I EARN and give it to people that won't work if you handed them a job on a silver platter.
post #18 of 22
Quote:
Originally Posted by LDG View Post
It also means that people who are 72+ and have another source of income aren't going to be forced to withdraw money from accounts that may be down 30% - 40% from their valuations last year - which, right now are just paper losses - but if forced to sell, would become realized losses.
Laurie, this is what I thought the reasoning was for not requiring the RMDs

The flip side of this coin is BO's idea to allow people to withdraw 10k penalty free from 401Ks. Encouraging (which is what it amounts to) people to draw down these funds at their current valuations is poor judgement IMO.
post #19 of 22
Quote:
Originally Posted by Cinder View Post
Laurie, this is what I thought the reasoning was for not requiring the RMDs

The flip side of this coin is BO's idea to allow people to withdraw 10k penalty free from 401Ks. Encouraging (which is what it amounts to) people to draw down these funds at their current valuations is poor judgement IMO.
Yes, but they would still have to pay taxes on the money. That would prevent most people except the ones who need it from taking out the money. McCain would let people take money out at 10% tax rate instead of thier normal one which is a worse idea.
post #20 of 22
I AM in the 10% tax rate already.

I guess I assume (shouldn't do that) that those most likely to draw from their 401Ks will be lower income, who are in the lower tax brackets. If you're normally in a 25% bracket, have to pay 10% penalty and 10% tax...I guess that 5% difference could be a motivator.

If you're in my situation, and do away with the penalty...I might come out pretty sweet.

Thanks peachy, I'll reread both proposals and I'll pencil it out again.
post #21 of 22
Quote:
Originally Posted by Cinder View Post
I AM in the 10% tax rate already.

I guess I assume (shouldn't do that) that those most likely to draw from their 401Ks will be lower income, who are in the lower tax brackets. If you're normally in a 25% bracket, have to pay 10% penalty and 10% tax...I guess that 5% difference could be a motivator.

If you're in my situation, and do away with the penalty...I might come out pretty sweet.

Thanks peachy, I'll reread both proposals and I'll pencil it out again.
They both are trying to give some people relief by making it easier to take from their 401k. I had a link to both thier plans as it dealt with the 401k in one of the other threads. I think on McCains you did not have to pay the penalty either so. I don't like the thought of people tapping in their 401k's and I hope it is a last resort but there are people that just might have to .
post #22 of 22
I didn't think McCain's proposal eliminated the penalty.

Agreed, 401Ks should be off limits.
New Posts  All Forums:Forum Nav:
  Return Home
  Back to Forum: IMO: In My Opinion
This thread is locked  
TheCatSite.com › Forums › General Forums › IMO: In My Opinion › Compare the economic plans of the candidates