Obama vs. Romney: Ways they differ on taxes

By Bahiyah Shabazz, MBA

If you’ve been following both the Republican National Convention and Democratic National Convention you will notice some similarities. Both parties spoke about social issues and entitlement but most will argue the deliver and intent is different for each political party.

We can expect to hear candid debates that will address several issues as well as dance around certain topics.  In case you’re wondering about the platforms of the parties we have provided the Democratic and Republicans objectives.

For now, we will only discuss the taxes. Why? Because Americans want to know how their paychecks will be affected depending on the candidate who wins the election.

The Republican platform calls for extending the Bush era tax cuts while theDemocratic Platform will argue to extend tax cuts for the middle class and ask the wealthiest Americans & corporations to pay their fair share.

Notice both parties want to extend the Bush era tax cuts but each have a way of providing a long term solution.

Official photographic portrait of US President...

Official photographic portrait of US President Barack Obama (born 4 August 1961; assumed office 20 January 2009) (Photo credit: Wikipedia)

Obama:

Obama supports extending the Bush-era tax cuts for households earning less than $250,000 a year. He also wants to tax wealthy Americans and Corporations instead of providing relief for their pockets.

Giving such an extended tax cut can possibly cut into government revenue which is a concern for most. The solution to this particular issues it broadening the base of income that is subject to taxation.

What is broadening the base?

“Proposals to ‘cut rates while broadening the base’ — that is, cutting marginal tax rates while limiting deductions and credits to make up for lost revenue.

So cutting rates and expenditures never appears to work out for the bottom 80 percent of the income distribution, and the most likely proposals raise taxes on the bottom 90 percent as well. The top 10 percent, however, makes out pretty well.”

Obama would too replace the Alternative Minimum Tax (AMT) with a new regime focused on increased tax rates for millionaires. This strategy would assist most middle class families who are affected by the current AMT law.

Against the support of many who are in the wealthy class, President Obama would gather approximately $1.5 trillion over the next decade from higher taxes (wealthy).

“His proposed ‘Buffet rule’ holds that millionaires shouldn’t have a lower effective tax rate than their secretaries- and that they should pay at least 30 percent of their income in federal taxes.  (Romney and billionaire Warren Buffett are among the wealthy who have paid at about half that rate, because investment income is taxed at a lower rate than wage income.) The Buffet rule would replace the AMT.”

For families making less than $250,000, President Obama would continue a 15 percent tax rate on dividends and capital gains.

Obama has expressed taxing the top bracket at the 39.6 percent which is the pre-Bush marginal rate while favoring the middle and lower class.

speaking at CPAC in Washington D.C. on Februar...

speaking at CPAC in Washington D.C. on February 11, 2011. (Photo credit: Wikipedia)

Romney:

GOP Presidential Candidate Elect Mitt Romney wants a 20 percent reduction from the Bush era rates in all income tax brackets. The top bracket (wealthy) would be taxed at 28 percent while the bottom bracket (lower-middle) would be taxed at 8 percent. He also plans to revoke the AMT.

Romney, just as Obama plans to broaden the base by eliminating or reducing deductions and credits. Both candidates have not specified which ones would go.

Romney tax the top bracket at 28 percent and keep capital gains and dividends taxed at the rate 15 percent for individuals with annual income above $200,000, while eliminating those taxes entirely for Americans below $200,000.

Let’s not forget that Romney is abolishing Obama’s healthcare reform which would end investment income surtax.

Romney said in a June interview with CBS that he supports a progressive tax code and that under his plan ‘people at the high end will still pay the same share of the tax burden they’re paying now’.”

The victorious debate amongst the candidates and results of the polls are influenced by the voters.  The persuasion of which candidate is the best depends on how the tax decisions will affect your tax bracket, hence, pockets.

Both Obama and Romney income has been disclosed to the public for scrutiny. Although both candidates earned a sizeable income it’s safe to say that Romney came out on top in earnings. This leads to why each party would favor one tax bracket over the other.

Without our attempt to persuade anyone, Obama is more focused on assisting the heart of the country (middle class) while Romney wants to “protect” the wealthy. As we previously mentioned, if in office, Romney will abolish the Obama Healthcare Reform. In spite of how most feel about the Reform, the details speak for itself. The wealthy can afford to dispute the coverage.  While the middle and lower class will continue with their current coverage or given options to purchase healthcare if they aren’t afforded any through the Obama Healthcare Reform.

Again, we strongly suggest you listen and read the views of both platforms to make an educated decision about which candidate will {positively} affect your future. Don’t allow your emotional state to take over because of the current recession and high unemployment rate. Reflect back on the Presidents who were previously in the office, their political parties, and how evasive they were with communicating with the citizens of America.

What you need is transparency, opportunity and a President who believes the people matter.

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“Love yourself enough to support yourself.” ~ Bahiyah Shabazz

 © SMG, LLC

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