It is often said that most Americans vote with their wallets, and so a voter's guide to where the two presidential rivals stand on taxes certainly comes in handy.
Over the past four years, President Bush has twice signed legislation reducing individual tax rates on income in all brackets, and he has repeatedly called on Congress to make these tax cuts permanent, saying failure to do so would amount to a tax hike and threaten prospects for a robust economic recovery.
Congressional analysts say making the tax cuts permanent would cost about $1.3 trillion over the next 10 years.
For his part, Sen. John Kerry wants to preserve Bush’s tax relief for lower- and middle-income earners, but he proposes repealing tax cuts for Americans earning more that $200,000 a year, and he says he’ll use the extra revenue to fund new policies, like healthcare reform.
Not surprisingly, higher-income families would pay more under Kerry’s tax plan, presuming Congress were to approve it.
A married couple with two children and an annual household income of $250,000 can expect to pay $1,300 more annually in taxes, according to a Deloitte Tax LLP analysis. The family’s saving under the existing tax law is $5,380, compared with tax rates that prevailed in 2000.
The same family, if it had a household income of $180,000, would see no change in their tax bill under Kerry's tax plan according to Deloitte’s analysis.
“The battleground for the two [tax] plans is how Bush and Kerry treat families and individuals with income over $200,000,” said Clint Stretch, director of tax policy at Deloitte Tax LLP.