As the time to choose one of the U.S Presidential candidate comes close, I bet, it plays in every mind about that person, and the congressional party which will turn positive the ever growing US fiscal deficit, looming credit crisis, loss of jobs and the global inflation worries, is it Senator Barack Obama of the Democratic party, or Senator John MaCain of the Republican party.
Over the last 8 years, America has seen its budget turning negative to $350+ Billion from a surplus of $220 +Billion in year 2000. Owing to the President Bush’s $ 168 billion stimulus package, the federal deficit for next year is slated to be around $500 billion. Few economists feel that further tax cuts will bring this country out of recession, however, failing Social security and Medicare programs poses a big concern.
Here are some promises each of the presidential candidates make to the citizens of this nation – (hopefully atleast majority of these promises will be fulfilled, and not all remain as promises!. Our current President promised a big deal on trimming green house emissions…and it still remains a promise…)
Senator Obama –
ü Short term Tax Stimulus of $ 50 Billion
ü Providing health insurance coverage to 45 million uninsured Americans – $ 65 Billion
ü Develop green energy technologies, $ 150 billion
ü $ 60 billion (over the next 10 years) towards development of infrastructure
ü Early childhood education – $ 18 billion annually
ü College students to get $ 4000 in tuition tax credits
ü $ 1000 credit for families hit by high energy costs
ü Raise top two income tax brackets to 36% and 39.6%…… Ouch!
ü Raise taxes on Oil and gas companies
ü Tax Gains in the hands of Private equity partners as regular income (now as lower rate capital gain)
ü Bring Tax havens & income earned overseas under the tax net …… Ouch!
ü Offer AMT Indexation benefit & continue Bush’s reduced tax rates to families making income of less than $ 250K
Senator McCain –
ü Believes Tax cuts creates growth and bring back lost jobs – Overall estimate of $ 4.2 trillion in tax cuts over the next decade.
o Make President Bush’s Tax cuts (which is due to expire in 2011) permanent (Costs $170 billion over the next decade)
o Cut AMT rates and offer indexation ( Costs $ 120 Billion a year)
o To Increase Children and dependent deduction from $ 3500 to $ 7000
o Reduce Corporate Tax rate from 35% to 25% (Costs $ 73 billion annually)…Wow!
o Reduce Estate tax from planned 2009 rate of 45% to 15%
ü Promises to balance the budget by cost control, and closing tax loopholes (worth $ 100 Billion annually)
ü To Help lower energy costs
o Take away restrictions on offshore drilling
o Suspend federal gas tax
o Aggressive expansion of nuclear power,
o and measures to boost alternative energy.
Senator Obama’s plan means tax revenues at 18.3% of GDP v/s Senator McCain’s 17.6%, certainly looks like a better plan to bring the economy out of budget deficit. Also, Obama’s populist plan looks more clearer and realistic, a strategy to bring back this nation to its original strength by improving the fundamentals. However, it remains to be seen how some of the popular ideas such as taxing Private equity firms, placing a robust health care system, taxing gas producing companies and increasing the overall corporate tax rates, would play against heavy lobbying that takes place in Washington.
So, from a corporate taxation and law enforcement point of view, McCain’s agenda sounds better. As I said in the beginning, these are promises, no presidential candidate till date has kept up with them all….
I’m the believer of the saying, “Politics & Politicians never change, their agenda is always one and known”….anyways, Good luck Senator Obama and Senator McCain!……All I’d like to see is a good business environment that America has offered all these years to entrepreneurs like me and many others, and lower gasoline price to drive down to office everyday, and can afford to take a vacation from my busy and stressful routine!
The contents of this post are personal statements or opinions expressed by the author. The above must not be construed as statements favoring or campaigning for any political party nor any financial, investment or taxation advice.