Following an historic election, we take a moment to examine just what an Obama presidency will mean to the United States - what we have to look forward to, and how he will deal with our current financial crisis. And according Jim Davidson, some of the numbers just don’t add up.

One of Obama’s prime campaign planks has been his promise to mercilessly raise taxes on the “rich,” a group initially defined as those making more than $250,000 per year. This was later dropped to $200,000 per year, and more recently has been defined as those Americans making more than $150,000 annually.

Setting aside the precipitous downward slide in the definition of “rich,” there is ample reason to suspect that Obama’s tax changes portend much higher, if not confiscatory, taxes on the most productive Americans. Obama has strongly argued for higher taxes as a way of employing government to alter the

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I think now is the time to consider the fiscal implications of the candidates' budget -- and particularly tax -- plans, especially considering the revenue declines and outlays that will confront the next President. Indeed, I would say imminent revenue declines will place an even greater premium on sensible tax plans, and efficient use of Federal dollars. Figure 1 displays the budget surplus to GDP ratio, both actual and CBO baseline.

Figure 1: Federal budget balance to GDP ratio (thick dark green), baseline (green), EGTRRA/JGTRRA extended (purple), baseline with Obama tax plan as stated by campaign staff (blue), baseline with McCain plan as stated by campaign staff (red), and Deutsche Bank estimate for FY 2009 (teal square). All dates pertain to fiscal years. Sources: CBO, The Budget and Economic Outlook: An Update (September 2008) Table C-2, Table 1-8 [xls], 2008 deficit data from October Monthly Budget ...

I think now is the time to consider the fiscal implications of the candidates' budget -- and particularly tax -- plans, especially considering the revenue declines and outlays that will confront the next President. Indeed, I would say imminent revenue declines will place an even greater premium on sensible tax plans, and efficient use of Federal dollars. Figure 1 displays the budget surplus to GDP ratio, both actual and CBO baseline.

Figure 1: Federal budget balance to GDP ratio (thick dark green), baseline (green), EGTRRA/JGTRRA extended (purple), baseline with Obama tax plan as stated by campaign staff (blue), baseline with McCain plan as stated by campaign staff (red), and Deutsche Bank estimate for FY 2009 (teal square). All dates pertain to fiscal years. Sources: CBO, The Budget and Economic Outlook: An Update (September 2008) Table C-2, Table 1-8 [xls], 2008 deficit data from October Monthly Budget ...

With the national conventions behind us, and a series of debates now on the horizon, today I want to give you a little preview of what each of the two major party's candidates might do to our tax bills in 2009. Before we go any further, I want to make something absolutely clear: I'm not endorsing either candidate's platform. I don't think they go nearly far enough in terms of true reform. Besides, as guys like Ron Paul have been pointing out, the real problem is that our government is simply spending too much money in the first place! But that's a rant for another day. Today, I just want to give you a straightforward look at what kind of possible changes are on the horizon, and then tell you about some more ...

Or, What would be the net effect on investment of the McCain tax plan?

Figure 1: Real nonresidential fixed investment (blue) and investment in equipment and software (red), SAAR. NBER defined recession dates shaded gray. Source: BEA GDP release of August 28, 2008, and NBER.

As noted in a previous post, the McCain and Obama campaigns have many different components. The McCain tax plan involves a series of tax reductions aimed at lowering the cost of capital facing firms, with the aim at spurring investment; and as Jim pointed out, investment is a key determinant in our future prosperity. On the other hand, one particularly substantial difference with the Obama plan is that, as scored by the respective campaigns' officials and tabulated by the nonpartisan Tax Policy Center, the McCain tax plan involves a $1.3 trillion dollar larger cumulative budget deficit over FY2009-2018. This suggests to me countervailing

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There are many moving parts to McCain's budget policy (see McCain site on the economy, [0]), so I can only undertake a partial analysis. That being said, extension of JGTRRA and EGTRRA is the most concrete, and easy to score, component, exactly because the CBO has already done it.

Figure 1 depicts the impact of making permanent the Bush tax cuts of 2001 and 2003, relative to the March 2008 CBO baseline.

Figure 1: Unified budget balance to GDP ratio (blue), baseline (teal), and counterfactual under extension of JGTRRA and EGTRRA (red), by fiscal years. Incremental debt service approximated by prorating the total increments listed in Table 1.3. Balance to GDP ratio incorporating extension of JGTRRA/EGTRRA and growth of discretionary spending with nominal income (green box). Ten-year-out impact ($280 billion) of growth of discretionary spending with nominal income rate from August 2006 Outlook. Source: ...

The economic visions of the presidential candidates in 2008 are dramatically different, and the contrast is most striking when they discuss taxation. Barack Obama will steal from the pages of English folklore and take from the rich to give to the poor; well, actually, to the middle class, who will benefit from major tax cuts. John McCain sees things differently, and he will cut taxes across the board - most heavily in the highest income bracket, who will see more than $700,000 pumped back into their wallets.

Source:Tax Policy Center via CNNMoney.com

The data above, compiled by a nonpartisan policy group in Washington DC, doesn’t take into account Obama’s plans to change the capital gains tax - and he’s been quoted saying that he’ll hike it

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We are joined today by Director of Zacks Equity Research Dirk van Dijk, CFA, who was kind enough to take some time out of his busy day to speak with us.

We’re doing a rather last-minute interview here for publication Thursday morning (the 28th). What is on your mind to talk about?

Well, with the Democratic National Convention underway and therefore political season in full swing, lots of claims and counter claims will be made about taxes. Amid all the spin, careful analysis often gets lost. The Tax Policy Center (TPC), a non-partisan group, sat down with the top economic advisors for both campaigns and attempted to sort out just what the implications are from the proposals of each side would be.

And what is the verdict?

Well first of all, I strongly urge all readers who care about the long-term fiscal health of the U.S. Government to

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