McCain Taxez

John McCain proposed new tax cuts and spending reductions in a speech yesterday, laying out a plan that would give the federal government a central role in reviving the sagging U.S. economy. He seeks an alternative tax system, a temporary moratorium on gasoline taxes and a doubling of the tax exemption for dependents to $7,000 from $3,500, according to excerpts of his speech. He also will propose plans for affluent Americans to pay more for the Medicare drug plan and for any homeowner in danger of foreclosure to receive a government-guaranteed mortgage.

Will this appeal to Conservatives pissed off by the choice of McCain? Will moderate Independents view such policies as much more desirable than the general socialism being proposed by Clinton and Obama? Or will this be seen as empty rhetoric from a man that didn't support Bush's tax cuts? Or just pandering on Tax day?

He says he wants to phase out the AMT and make the Tax cuts permanent. Then he says increase the personal exemption to $7k from $3.5k.

Think about this, everyone who pays the AMT did not get the Bush tax cut. Especially if you don't have kids. The number of people paying the AMT went up precisely when the tax cut came in and when the tax cut expires in 2010 all the people that got sucked up into the AMT over the past 5 years will no longer be in it.

Here's where it gets interesting - By changing the rules, a poor person would have to make 10K before being taxed by the Feds, instead of 7K now. If you are a single parent of one child, that means you pay no taxes until your income hits $14k. This plan helps poor people by giving them more money.

By making the tax cut permanent with the increased personal exemption, you effectively extend the number of people who benefit from the tax cut. If they don't extend the tax cut, but go with the increase personal exemption, then you still have most of the tax cut for those who got screwed out of it the first time around due to the AMT. Of course if ANY of this pandering were to really work out, the Democrats will cry huge tears of grief for the $50 billion taxes from the ATM - er, AMT...