For all of the emotion surrounding this year's presidential election, facts are frequently pushed to the side. That's why we were happy to see an Oct. 26th Wall Street Journal piece titled "Obama v. McCain: It's About Your Money." Written by reporter Shelly Banjo, the piece outlines the costs and benefits of each candidate by focusing on six key areas, including short-term economic relief, income taxes, estate taxes and AMT, health care, investments, and retirement & social security.
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While Barack Obama has been quick to pledge relief for middle class Americans, Banjo's analysis clearly demonstrates that he will do this at the cost of the nation's job creators. For families making more than $250,000, you will see your taxes go up. And while Obama has pledged to extend the so-called Bush tax cuts of 2001 and 2003, he's also planning to raise the top two marginal taxes rates to 36 percent and 39.6 percent.
That's not all, he wants to raise the top long-term capital-gains rates on securities and qualified dividends from 15 to 20 percent for all families making over $250,000 a year, and implement a 2 to 4 percent payroll tax on all incomes above $250,000 (to be split between employer and employee). Under Obama's plan, employers would also be on the hook for new regulatory requirements concerning retirement. According to Banjo, "employers that don't offer a retirement plan would be required to enroll employees in a direct-deposit individual retirement account." Health care subsidies would be provided, with mandates that all children be covered.
The difference of an Obama candidacy in real dollars: For any family making more than $250,000 or any small-business owning individual earning more than $200,000, the change could mean tens of thousands of dollars every year. And while Obama's class warfare has picked mightily on the wealthy, the first thing to go may be that extra swanky personal assistant, the nanny, the gardener, or the after-school tutor. Less jobs for Americans seeking entry into the workforce.
The worst part about Obama's plan: it creates a disincentive to earn over $250,000 - meaning that small businesses are much less likely to become big businesses. Dying with this aspiration is the very real prospect of good quality jobs. Don't think it will happen? Just look at the 1993 Federal Family Medical Leave Act, which mandates up to 12 weeks of leave for any business that employs over 50 workers. In tough economic times, many companies are scaling back to 49 or 48 workers. Obama's plan could similarly mean less jobs for cash-strapped businesses.
McCain is also not off the hook in Banjo's piece. While he advocates broad-based tax cuts, a mix of public and private health care, and privatized social security, he has failed to articulate a way to balance such priorities with the need to address our ever-growing federal deficit. His health care proposal calls for a $5,000 per family tax credit to cover health-insurance premiums and the ability for people to shop across state lines for better insurance options. The net savings for the average family would be $1,570. While it's a start in the right direction, we've got to find a way to pay back our nation's debt.
Read the Banjo piece and follow her terrific analysis. Do you want Barack Obama, a socialist who famously told America that he believes that spreading the wealth around is a good thing? Or do you want John McCain, a guy who wants to lower your taxes and understands the basic economics of job creation, but hasn't created a viable vehicle for cutting our out-of-control spending.
Regardless of which candidate you pick, remember this: As a nation, we need to feel the pain of tough cuts after a decade of financing McMansions and flat screen TVs with money we didn't have. We can't have our cake and eat it, too. We either feel the pain today or our children will pay for it tomorrow. The game of smoke and mirrors just isn't going to work anymore.