3/14/2008

Taxes and the Presidential Election

With the presidential election coming up the debate of taxes and tax breaks will start to heat up. With the fear of a possible recession, inflation, and increasing oil costs the tax issue will be one that is closely listened to. As Americans feel the pinch in their wallets a presidential candidates stance on tax increases and tax reductions may play a factor in who they vote for. Jabs regarding taxes are starting to fly between Barack Obama and John McCain. Reuters Article The stance a presidential candidate takes on taxes affects not only personal income taxes but also the taxes business pay. Barack Obama has been critical of John McCain's flip flopping on tax issues. He opposed President Bush's tax cuts in 2001 but is accused of supporting permanent tax cuts starting in 2006 to get the Republican Presidential nomination. Barack Obama and Hillary Clinton have stated clearly they will raise taxes if they are elected president. I'm not suggesting which presidential candidate a person should vote for but taking into account our countries current economic situation a presidential candidates position on taxes may decide who gets the vote.

2 comments:

Rearden said...

I agree. The state of the economy has come forward as a top issue for voters. Traditionally, democrats offer tax subsidies for the lower and middle class at the expense of big business and the wealthy. They penalize the very ones that produce the wealth and jobs that this country so desperately needs. The republicans on the other hand typically favor big business and lower tax rates for all, due to the belief that citizens can make better use of their own money and do more for the economy with the tax savings than the government.

In my opinion the progressive income tax rate system we currently use is perverse. It punishes those that are the most productive, while rewarding those that produce the least. If we want to encourage productivity, should we not impose a regressive tax rate? Personally, a flat rate is the only fair taxation method I have reviewed.

Dr. Tufte said...

It's interesting that the debate has completely dropped consumption taxes.

The problem with this, is that in any rational argument about income taxes, it would be quickly recognized that income is split between consumption now and savings (consumption later).

There are two points here. First, we can tax everything we want to with income by taxing consumption - only the timing changes. Secondly, don't we want to encourage savings when people choose to go in that direction?