The Facts About the Candidates’ Tax Plans

John McCain has accused Barack Obama of proposing tax increases for "working American families," while he has pledged to cut taxes for everyone. Obama says his tax plan has bigger tax cuts for the middle class and no tax increases on families making less than $250,000.

Who's telling the truth? It depends how you define "working American family." If you define "working American family" as the 95 percent of families whose income is a lot lower than $250,000 — median family income is about $60,000 — Obama's tax plan is better.

Such are the findings of numerous non-partisan studies of the candidates' tax proposals. A summary by the Urban-Brookings Tax Policy Center illustrates who does better under each plan (click here to see chart). Taxes for a working family making $37,595 to $66,354 would get an average tax cut of $1,042 under Obama, but just a third of that amount ($319) under McCain.

The tax cut advantage swings around the other way when looking at high-income families. Under McCain, a family making $226,982 to $603,402 would get a tax cut averaging $31,484, but just $12 under Obama. A family between $603,403 and $2.87 million gets a tax cut of $45,361 under McCain, but a tax increase averaging $115,974 under Obama. These high rollers are the "working American families" upon whom McCain voices his concern over higher taxes.

Obama offers tax assistance to the working poor and low-income seniors not addressed by McCain. Obama would give a "Making Work Pay" tax credit of $500 for individuals/$1,000 for families. This would exempt 10 million working poor from having to pay federal taxes. Obama would also give a 100 percent tax exemption to the estimated 37 million senior citizens making less than $50,000.

The Hidden Health Care Tax

Millions of retirees and working Americans would pay thousands of additional dollars in federal and state taxes under John McCain's little-discussed health care reform proposal. Under his plan, employees would, for the first time ever, have to pay income tax on the value of their employer-provided health care. McCain's plan eliminates the tax exemption for employer-paid health care.

McCain's plan offers tax credits to help offset the new taxes ($2,500 for an individuals; $5,000 for families), but his proposal would dramatically reduce the take home income of workers who are currently covered by an employer-paid health plan (click here to see chart). A married AT&T worker from Michigan with two children would pay an additional $1,035 in income taxes after the first four years of the plan's implementation and $7,222 after eight years. For a married Embarq worker in North Carolina with two children, the impact is worse — $5,061 in additional income taxes for the first four years and $18,936 after eight. For a married Verizon retiree in Maryland, McCain's plan results in a $555 tax increase after four years and $9,382 after eight.

McCain Would Tax Employees on Employer-Paid Health Care

Millions of retirees and working Americans would pay thousands of additional dollars in income taxes under John McCain's little-discussed health care reform proposal. Under his plan, workers covered by an employer-paid health care plan would, for the first time ever, have to pay both federal and state income taxes on the value of their plan. McCain's plan offers tax credits to help offset the new taxes ($2,500 for an individuals; $5,000 for families), but the credits do little to offset the dramatic reduction in workers' take home pay as a result of the new health care tax. Click here to see examples of the impact on CWA families at major employers and different parts of the country. With the exception of the retired couple, all cases assume that both husband and wife work and have two children.