Total tax of $8,721
If the Bush tax cuts expire
Return of Marriage Penalty and Reduction in Child Tax Credit
- They have a standard deduction of $9,650
- Five exemptions at $3,700 each = $18,500
- Taxable income of $28,850
- Tax of approximately $4,328
- $500 child tax credit = $1,000
- Income Tax = $3,328
- Plus payroll tax of $8,721
Until 2008, Darrell Seela owned a home in Las Vegas where he and his wife worked and raised three children. After the crash, he lost his job as a draftsman and industrial engineer for a major homebuilding company. The Seelas lost their home soon after.
The family moved to Ridgecrest, Calif., where Darrell found work. But his wife hasn’t been able to land a new job as a mortgage administrator. “With two incomes we might be able to make it fairly well,” Seela says, “but with one income it’s killing us.” Seela now makes $57,000 a year. His oldest daughter is 18, attends college and works; his 13- and 16-year-olds still live at home.
“We’re used to a certain type of life, and we’re getting that taken away from us,” he says.
When Seela votes for president next fall, he will vote for an economic strategy, as well.
As part of their plans to revive the economy, several presidential candidates have offered innovative prescriptions to reform the U.S. tax system.
For the Seelas and millions of other American families, there is no status quo: if Congress does not act on President Obama’s proposals, the Bush-era tax cuts are scheduled to expire, with powerful repercussions. The charts here show a sampling of the tax proposals, and what would happen if the Bush tax cuts expire.
In a nutshell, Obama wants to end the Bush tax cuts for the wealthiest Americans, while retaining them for working and middle-class families.
Mitt Romney’s plan would preserve the Bush tax cuts for the rich as well, and cut taxes on wealthy estates and corporations.
Texas Gov. Rick Perry’s proposal for a new flat tax, and Herman Cain’s 9-9-9 plan, offer more radical change.
Perry wants to slash taxes on individual Americans and businesses, and offer taxpayers a flat tax rate of 20 percent, with generous deductions.
Cain would scrap the current income tax and payroll tax system, in favor of a 9 percent tax on income, a 9 percent tax on business income, and a 9 percent national sales tax.
Millionaires would fare well under any plan but Obama’s. To avoid massive deficits, Perry’s plan would require huge cuts in the federal budget.
Campaign tax plans don’t become law without considerable alterations in Congress. But a candidate’s approach gives voters a glimpse of his or her economic priorities, willingness to consider drastic change, and political values and temperament.
In these tables, iWatch News has taken the Seela family financial information and calculated what its taxes would be under various proposals. We assigned them standard deductions and exemptions, and included only wages – not investment income.
Seela, a political independent, is not impressed by the promises of the Republican challengers. They all, he says, favor the rich. Even under Perry’s plan, says Seela, the wealthiest Americans would benefit at the expense of working families once the cuts in benefits that families like his rely upon are considered.
“None of the Republicans will raise taxes on the rich no matter what,” he says, “not even if it means hurting the poor and middle class even more than we are already hurting by eliminating our safety nets like Social Security and Medicare. To me, that is just plain crazy and heartless.”