Taxes

Today, the top federal income-tax rate for ordinary income is 35 percent, meaning that earned income is taxed at a rate 2 1/3 higher than income from capital gains

McCain’s health plan will hit families with a huge new tax. Currently, employer-provided health care benefits are tax exempt, a longstanding policy that has saved families thousands of dollars and helped keep health care costs from spiraling out of control. McCain has promised to eliminate this tax break, a move that could add over $1,100 to the average family’s tax bill by 2013.

The tax credit McCain claims will offset this new burden would rise only at the rate of inflation—not the rate of health care costs, which grow much more quickly—so that by 2018 a family earning $40,000 a year will be paying $2,800 in higher taxes, even with McCain’s tax credit.

The health care tax exemption does more than lower families’ tax burden; it also provides an incentive for businesses to offer health care benefits to their employees. Without the exemption, an estimated 11 million to 27 million people nationwide will lose their employer-sponsored health insurance. more »