Tax cut for 'working' Americans?

[Lionqueen2]

Yesterday, I was talking with my mom who just came back from a get- together with her friends who are mostly retired teachers. They were discussing a concern that they will be left out of Obama's tax plan because they are not 'working' and Obama has said that 'working' families won't see an increase if their incomes are under $250,000. They live on fixed-income pensions and some investment money, but none of them come near the $250,000 figure. They feel they may be facing a tax raise since Obama keeps saying that 'working' families won't see a tax raise and that he will be taxing capital gains at a higher rate.
I am a Dem that will be voting McCain this year and surprising to me, my mom will be doing the same, but I have to agree with her. I have not heard Obama address how he will be treating the millions of retired people on fixed incomes in this country. I know that he has mentioned giving rebates to 'working' families who don't already pay taxes (the 40%) based on social security, but how about those older folks who support themselves through other means and don't rely on the government for help? Mom asked if I had any answers and obviously, I do not.

 

[adkkev]

Please take the time and do some research about both candidate's tax plans. There is nothing is either candidate's plan which says that folks on fixed incomes (under $250K in Obama's plan) will have an increase in taxes.

 

[GeorgeG]

Here's how it works...

Just about any plan either candidate has for just about any campaign issue will need congressional approval to become a reality. That will not likely happen overnignt. We all elect and pay our people in Congress to represent us in all matters such as this. I suspect these representatives do not hear enough from the people who elected them on how they should vote on various bills so we need to start telling them our concerns and how we want them to vote. Of course, that doesn't guarantee they will listen, but they all have to run for re-election sometime and that's as good a time as any to show our approval or disapproval. I do believe we are way too easy on our elected representatives.

 

[Christine]

If your mother's retirement income from her pension is taxable, then she is considered "working." Anyone who has taxable income would be considered "working" even if they are not. However, if the pension distributions are non-taxable, then they would not be considered "working."

 

[bicker]

I'm not so sure that is true, but regardless, there is nothing about McCain's tax proposals that would benefit retirees with modest incomes more than Obama's tax proposals would.

Remember, just because one side is "bad" with regard to something doesn't mean that the other side isn't "WORSE".

 

[corndog]

I'm not so sure that is true, but regardless, there is nothing about McCain's tax proposals that would benefit retirees with modest incomes more than Obama's tax proposals would.

Remember, just because one side is "bad" with regard to something doesn't mean that the other side isn't "WORSE".

Actually, McCain says he will hold the current 5%/15% rates for LTCGs and qualified dividends. That is a significant difference.

 

[bicker]

Holding rates the same for folks with modest incomes (McCain) and not increasing taxes for folks with modest incomes (Obama) is the same.

 

[Chicago526]

Holding rates the same (McCain) and not increasing taxes for folks making less than $250K per year (Obama) is the same.

Not only that, but isn't Obama propossing putting a freeze on making people with IRA's and 401k's making manditory withdrawls at age 70? I didn't pay close attention to that since I'm 35 years away from retirement but I remember hearing that. Once you hit a certain age, you're required to start drawing down your tax deferred accounts. Under this plan, retired folks won't be made to make withdrawls at the bottom of the market, and "locking in" their losses.

 

[corndog]

Holding rates the same for folks with modest incomes (McCain) and not increasing taxes for folks with modest incomes (Obama) is the same.

And that's why I specifically limited my comments to tax rates on LTCGs and qualified dividends, not earned income:

Actually, McCain says he will hold the current 5%/15% rates for LTCGs and qualified dividends. That is a significant difference.

 

[Lionqueen2]

Please take the time and do some research about both candidate's tax plans. There is nothing is either candidate's plan which says that folks on fixed incomes (under $250K in Obama's plan) will have an increase in taxes.

Actually, I had not given much thought to this, but now wonder myself. Obama does use the term 'working' families. All mom's friends fall well under $250K and pay taxes on their pensions and capital gain. They are all older and none are rich, but can support themselves at this time. If they don't qualify for allowing their taxes to remain the same including capital gains, that may not be the case any more. I'm also thinking that this could put me in a situation where I will need to contribute to mom's support due to the question about taxes and inflation. She is a proud woman. This will not be easy.

 

[bimshire]

Speaking of taxes, Forbes magazine explains:

Republicans have been hammering away at swing-state voters with their "Joe the Plumber" argument. They say a tax increase levied against families earning more than $250,000 a year--something Obama says he'd do as president--would hurt the middle class.

The "Joe the Plumber" argument came from a voter who confronted Obama and said he was concerned that if he buys a business that would move him above the $250,000 threshold, he would be subject to a tax increase under Obama's plan.

Maybe some business owners make that much, but even top-paid plumbers don't. A new study by a leading compensation data service, PayScale.com, examined salaries for a sampling of jobs with special attention to pay in three swing states.
In Pictures: What Plumbers Really Make
According to the study, it is nearly impossible for Joe the Plumber to make $250,000 a year as just a plumber.

PayScale.com studied a number of typical middle-class jobs and the wages they pay in three swing states: Ohio, Florida and Colorado. They found in many cases that the top 10% of earners in these jobs would still fall short (very short) of $250,000 a year.

The average plumber in Florida makes $54,800 a year. The top earning 10% of plumbers there make at least $111,900. But these aren't entry-level positions. These numbers are based on those with 15 or more years of experience. A family with two top-notch Floridian plumbers could still make only about $224,000 a year--falling short of that $250,000 threshold.

PayScale's database pools 15 million compensation profiles. From this database, they found that even some jobs that are traditionally considered upper class made median incomes far less than $250,000. Among them: corporate attorneys ($141,000), pediatricians ($151,000) and chief financial officers of companies with about 500 employees ($167,000).

Jobs that cross the $250,000 a year threshold on average are few and far between. Cardiologists ($270,500) and surgeons ($298,600) make the cut rather easily. CEOs barely top the mark, with an average income of $251,100--but only when looking at companies with about 500 employees. Accounting firm partners make an average of $267,600, but only at firms with 50 or more partners.

It's just hard to make enough to be taxed more.

http://www.forbes.com/leadership/2008/10/22/plumbers-pay-obama-lead-compensation-cx_kk_1023pay.html