Top Stories

On Taxes: Where Do McCain & Obama Stand?

NEW YORK (CBS) ― With their vice presidential candidates in tow, Barack Obama and John McCain are looking ahead to the final leg of the presidential campaign. Despite wars on two overseas fronts, the presidential hopefuls are turning to domestic issues. As the economy stumbles here at home, Americans are looking to the candidates for answers.

Taxes are the most obvious way to do that, but that's an issue that the two candidates are far apart on.

Their visions on taxes and American economy are so divergent that both have actually said, perhaps tongue in cheek, they don't want you vote if you don't see things their way.

"If you believe you should pay more taxes, I'm the wrong candidate for you. Senator Obama is your man," says McCain.

"If you think that the economy has done right by the American family then you should vote for John McCain," says Obama.

So let's start with the income tax, the tax we all pay. Obama wants to turn the tax code back eight years, before Bush. McCain wants to cement in the Bush tax cuts.

Take a look at who pays.

McCain's proposal reduces every income tax bill in America, but the largest six-figure tax cuts are for the very wealthiest America.

People making roughly $3 million and up would average almost $270,000 in tax cuts under McCain. Those at or above the $600,000 mark would net more than $45,000.

Obama takes a "soak the rich" approach, taxing multi-millionaires an additional $700,000 a year. People making over $600 would, in his plan, fork over an additional $116,000 annually.

Obama's tax breaks for the poorest, those making less than $19,000 though, would average $567 a year compared to McCain's $19, essentially Obama taking from the rich and giving to the poor.

Conservatives say it's a bad idea.

"You are sucking oxygen out of the system," says Jim McTague of Barron's Magazine. "The rich people, they're the ones who invest in new companies that create new jobs. We need to grow ourselves out of this current deep recession."

Other economists argue there's plenty of room from more taxing at the top.

"If a thing is worth doing, if a thing is profitable, increasing the marginal tax rate on that is not going really going to change that dynamic," says economist Ken Goldberg. "Ultimately if it's worth doing, it's worth doing."

Obama wants higher capital gains taxes on the sale of stocks and property. McCain wants lower corporate taxes.

And when you die, McCain would like to see the first $5 million sheltered from taxes, taking 15 percent above that.

Obama wants the exemption cap much later, at $3.5 million with 45 percent of the remaining inheritance going to the government.

There are bills to pay – the war in Iraq and Afghanistan at more than $30 billion a month; the crumbling American infrastructure; the retiring baby boomers; and the massive deficit. Obama says government can fix it.

"I will go through the federal budget line by line, eliminating programs that no longer work and making the ones we do need work better and cost less," he says.

McCains says some things will have to remain undone.

"We've got to set some priorities in Washington and that means saying no sometimes. Saying no sometimes, that's what we have to do," he says.

The classic small government pitch of the Republican versus the New Deal federalism of the Democrat – in 2008 a fight for the direction of a nation.

(© MMVIII, CBS Broadcasting Inc. All Rights Reserved.)

---