Will Obama or McCain's proposal tax home sales more? What about capital gains? With “both John McCain and Barack Obama offering tax cuts,” according to the Christian Science Monitor, “the 2008 election promises a boost for the typical family budget” regardless. But the myths require debunking - smears circulate in email misrepresenting the differences - sometimes deliberately. Facts help..."New Tax" Falsehoods: One e-mail in particular contains a string of made-up taxes that it falsely claims Obama has proposed. He has not proposed a tax on new homes with more than 2,400 square feet, or a new gasoline tax or a tax on retirement accounts. The most laughably false claim is that Obama would tax "water." But it's out there, and in covering it the media echoes it... Want more facts?
- Capital Gains Rate: It's untrue that Obama is proposing a 28 percent capital gains tax rate. He said in an interview on CNBC that he favors raising the top rate on capital gains from its present 15 percent to 20 percent or more, but no higher than 28 percent. And as for a 28 percent rate, he added, "my guess would be it would be significantly lower than that."
- Tax on Dividends: Another false claim is that Obama proposes to raise the tax rate on dividends to 39.6 percent. Dividends currently are taxed at a top rate of 15 percent, and Obama would raise that to the same rate as he would tax capital gains, somewhere between 20 percent and 28 percent but likely "significantly" lower than 28 percent. This higher tax also would fall only on couples making $250,000 or more or singles making more than $200,000.
- Taxing IRAs and 529s: Contrary to email rumors, raising tax rates on capital gains or dividends would not result in higher taxes on any investments held in Individual Retirement Accounts or in popular, tax-deferred "college funds" under section 529 of the Internal Revenue Code. The whole point of such tax-deferred plans is that dividends and capital gains are allowed to accumulate and compound tax-free, and neither Obama nor McCain proposes to change that. And as previously mentioned, any capital gains or dividend income from stocks, bonds or mutual funds owned outside of tax-deferred accounts would continue to be taxed at current rates except for couples making over $250,000, or singles making more than $200,000
- Doubled Taxes? The claim that "Under Obama your taxes will more than double!" is also false. Do you really need to ask? The comparative rate tables one e-mail smear provides for McCain and Obama are entirely wrong, as explained in a March 13 article about another false e-mail (from which the tables are copied.) It is supposedly a comparison of tax rates before and after the Bush tax cuts, but it grossly overstates the effect of the Bush cuts. Obama actually proposes to retain the Bush cuts for every single income level shown in the bogus table.
- Estate Tax. The claim that Obama proposes to "restore the inheritance tax" is also false, as are the claims that McCain would impose zero tax and that Bush "repealed" it. McCain and Obama both would retain a reduced version of the estate tax, as it is correctly called, though McCain would reduce it by more.
The tax now falls only on estates valued at more than $2 million (effectively $4 million for couples able to set up the required legal and financial arrangements). It reaches a maximum rate of 45 percent on amounts more than that. It was not repealed, but it is set to expire temporarily in 2010, then return in 2011, when it would apply to estates valued at more than $1 million ($2 million for couples), with the maximum rate rising to 55 percent.
Obama has proposed to apply the tax only to estates valued at more than $3.5 million ($7 million for couples), holding the maximum rate at 45 percent. McCain would apply it to estates worth more than $5 million ($10 million for couples), with a maximum rate of 15 percent. I wonder how that difference relates to the assessed value, or anticipated selling price, of the best of the McCain homes...
Why all the misinformation?
Some of it's based on simple confusion. After all, Obama's not prone to cute sound-bites such as "Read my lips: No new taxes." Some of the emails circulating, however, are so consistently mis-representing the facts - facts that are easy to verify - that one can only conclude a deliberately malicious intent to strike fear in the wallets of middle class voters is behind the lies.
In an ideal setting voters would all have access to reliable, current, accurate information sources. They'd also take the time to examine that information, no matter if it was Obama's stand on taxes, McCain's statements about taxes or his speeches on why health care doesn't need the fixes Obama's proposed, or rookie Governor Palin's changing stand on the pork barrel "Bridge to Nowhere." In practice, time is short, and rumors often get as much (if not more) coverage as facts on the evening TV news or in newspapers. Futhermore it's often hard to tell which part of a story is the truth. The media producers have motives that must be examined, particularly those who profit from selling commercials since they obviously desire to make a profit. When in doubt, follow the money.
Who profits from the election of McCain or Obama -- or your mayor?
Who profits from voters feeling disenfranchised and tuning out?
The airwaves are as full of misinformation - willfully employed - as the email is. Are you ready to step up and be an Agent of change, to contribute to help spread the truth?
I would go a step further and assert that in an ideal setting, none of the candidates would dissemble about each others' positions or record. Alas, and irrespective of definition, this election will not take place in an ideal world. It will, however, take place in the United States of America, where voters do in fact have access to reliable, current and accurate information sources. In fact, our access to information has never been better than it is today. Make your own decision whether to thank the free market or Al Gore for the internet. Meantime, visit factcheck.org to check up on all the candidates.
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