Obama's expanded economic plan--ADDED McCain's new plan

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dmaul1114

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Obama expanded on his economic plan today, outlining some details on how he would try to get the economy back on track.

http://www.nytimes.com/2008/10/14/us/politics/14campaign.html?_r=1&hp&oref=slogin

The main points from the article:

The main new proposals would:

— for the next two years, give businesses a $3,000 income-tax credit for each new full-time employee they hire above the number in their current workforce;

— allow savers with tax-favored Individual Retirement Accounts and 401(k)’s to withdraw 15 percent of those retirement savings, up to a maximum of $10,000, without paying a tax penalty as the law currently requires for withdrawals before age 59 and a half;

— bar financial institutions that take advantage of the Treasury’s rescue plan from foreclosing on the mortgages of any homeowners who are making “good-faith efforts” to make payments;

— direct the Treasury and the Federal Reserve to create a temporary facility for loans to state and local governments, similar to the Fed’s new arrangement to loan corporations money by buying their commercial paper, which are the I.O.U.s that help businesses with daily operating expenses like payrolls.
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I see nothing to disagree with their, and I like that he has put out a more specific plan. Though as I've said before I know nothing about economics so I have no opinion on it's chances of helping or hurting things.

Here's McCain's new plan: http://voices.washingtonpost.com/the-trail/2008/10/14/mccain_offers_economic_plan.html

Bullet points:

-A proposal to lower the tax rate on seniors who tap their IRAs and 401(k)'s after reaching 59-and-a-half years old. Under his proposal, which he estimated would cost the government about $36 billion, the first $50,000 of withdrawals would only be taxed at the 10 percent rate, his aides said.

"Retirees have suffered enough and need relief, and the surest relief is to let them keep more of their own savings," McCain said.

- For those who sell stocks at a loss, McCain would increase the amount they can deduct from $3,000 to $15,000, making it less of a burden for those who need immediate cash to survive the economic downturn, his advisers said.

-Capital gains taxes would be cut in half, McCain said, for two years, from 15 percent to 7.5 percent. His aides said that would cost the federal government about $10 billion, but would provide an incentive to save and invest.

For people looking for work whose income for the year is under $100,000, McCain would eliminate taxes on the unemployment benefits they receive. Aides said that would cost the government about $6.5 billion.
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allow savers with tax-favored Individual Retirement Accounts and 401(k)’s to withdraw 15 percent of those retirement savings, up to a maximum of $10,000, without paying a tax penalty as the law currently requires for withdrawals before age 59 and a half;
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I do like this, to some degree. It will be good for those who are on hard times, but it also depends on how often they can do this. If this is per year, then that is a very bad idea... because then we end up with a ton of people who blow their IRA/401k's and have no retirement. Im assuming this will probably be a one-time withdrawal, though.
 
I am against the idea of letting people withdraw 15% of their IRA without paying the tax. IRA's are suppose to finance retirement and this will cause people to sacrifice (more) future money for a reduced amount today. And what about the 10% penalty for withdrawing before you're 59 and half (which is separate from the tax)?

A better way to handle this would be to expand the list of qualifying events under which you get a exception to the penalties. I believe the only things that qualify are medical emergencies, college and house down payment. You could add financial hardship, possibility of bankruptcy, job loss, and just generally make it easier to qualify.
 
— for the next two years, give businesses a $3,000 income-tax credit for each new full-time employee they hire above the number in their current workforce;

This would be to easy for businesses to advantage of depending on how it is worded. A company could hire someone then fire them after the appropriate amount of time. This may not be workable.

The last two seem ok to me. I think states should have access to the same financing as all these corporation have had lately. Same easy terms and amounts and everything.
 
[quote name='cletus']— for the next two years, give businesses a $3,000 income-tax credit for each new full-time employee they hire above the number in their current workforce;

This would be to easy for businesses to advantage of depending on how it is worded. A company could hire someone then fire them after the appropriate amount of time. This may not be workable.
[/quote]


The mandatory drug test most companies issue upon hiring employees alone is $1500 in cost. It would be more expensive to fire people repeatedly than the $3000 credit. It wouldn't be worth it. It's too expensive to fire/hire someone.
 
[quote name='cletus']I am against the idea of letting people withdraw 15% of their IRA without paying the tax. IRA's are suppose to finance retirement and this will cause people to sacrifice (more) future money for a reduced amount today. And what about the 10% penalty for withdrawing before you're 59 and half (which is separate from the tax)?

A better way to handle this would be to expand the list of qualifying events under which you get a exception to the penalties. I believe the only things that qualify are medical emergencies, college and house down payment. You could add financial hardship, possibility of bankruptcy, job loss, and just generally make it easier to qualify.[/QUOTE]

I believe his plan is talking about waving that 10% penalty, not the regular taxes. Hence why it said "tax penalty."

Taxes vary by type of IRA. Traditional IRAs you get taxed on withdrawal, Roth IRAs you don't as the money was put in them post income tax.
 
Plumber to Obama: “Your new tax plan is going to tax me more. Isn’t it?”

Obama: “It’s not that I want to punish your success, I just want to make sure that everybody that is behind you, that they have a chance for success too. I think that when you spread the wealth around, it’s good for everybody.”

Great plan, Barry.
 
lol

considering plumbers made a little less than $50k on average last year they would be likely to support Obamas tax plan as it would possibly cut their taxes.

I still am baffled at your Snob sig. So, you find a guy who can't keep track of how many houses he owns and only considers you rich if you make $5mil a year, more relatable to the avg "joe sixpack"?
 
Does anyone realize what would happen to the markets, both stock and securities, if millions of people, in and above the retirement population, start withdrawing money every year without penalty? Penalties are in place for a reason for these types of deposits.
 
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