By JACK PALMER

palmer@crescent-news.com

"If you want a president that's going to raise your taxes, I'm not your candidate," Sen. John McCain is fond of telling Americans in his stump speech. "Sen. Obama is. I just want to make that very clear."

Is McCain correct? The answer, according to the independent Tax Policy Center (TPC), is "it depends on your income level."

Obama would raise taxes on families earning more than $226,982 per year (see graphic), while McCain would cut taxes for everyone regardless of income. For the .1 percent making more than $2.87 million, the average additional tax burden under the Obama plan would be a whopping $432,000 annually.

However, lower and middle class tax brackets would actually receive a larger tax cut under Obama's plan. For example, those earning between $37,596 and $66,352 per year would receive an average tax cut of $1,042 annually, compared to a $319 cut under McCain's plan. Those making less than $37,596 would benefit even more under Obama's plan.

In addition, the Democratic nominee would eliminate all income taxes on senior citizens earning less than $50,000.

"The Obama tax plan would make the tax system significantly more progressive by providing large tax breaks to those at the bottom of the income scale and raising taxes significantly on upper-income earners," said the TPC, a joint venture of the Urban Institute and Brookings Institution which strives for neutral analysis of candidate plans.

McCain's plan, on the other hand, calls for significant tax reductions for businesses and the very wealthy. He approaches economic policy from the Ronald Reagan supply-side tradition: cut taxes to encourage more economic activity, creating a greater supply of goods and services which will have a trickle down financial benefit to low and middle income workers.

The Republican nominee would also slash rates for corporations, which he argues will create more jobs.

Certified public accountant Tom Moriarty, a financial planner and partner with Penrod and George in Napoleon, agreed that higher taxes on small businesses making more than $250,000 could adversely affect economic growth.

"Lower tax rates on these businesses could help create or retain jobs," he stated. "If you go back 20 or 30 years, corporate rates were much lower. As that shifted, corporations became a less viable choice (as a business entity)."

Most small businesses don't generate net income of $250,000, but many successful ones do. They are often organized so that the income flows onto the personal tax return of the owner.

"Many business owners organize as sub-chapter S corporations," said Terry Melton, CPA, a financial planner and partner with Steyer, Huber and Associates in Defiance. "These businesses are effectively taxed at personal rates, not the corporate rate.

"When you hear the term 'small business,' many people think of the 'mom and pop' operations. But it's really much more than that.

"Here in our area, there are numerous businesses with 100-1,000 employees who make more than $250,000 per year," continued Melton. "They turn around and invest their profits in new equipment and technologies, plant expansions, or just to keep their current people employed. I see it every day."

In addition to his own plans to eliminate capital gains taxes on investments in small businesses and start-ups, Obama on Friday proposed using the Small Business Administration's (SBA) Disaster Loan Program to extend affordable, fixed-rate loans directly to small businesses, as it did after 9-11. This plan would expand SBA guarantees to encourage private lending to small firms by temporarily eliminating fees for borrowers and lenders and increasing the guarantee rate on private loans.

With McCain and Obama proposing tax cuts for middle class families, the future looks more promising for the typical family budget. But the candidates' proposals don't look as rosy for the U.S. government budget.

"Both John McCain and Barack Obama have proposed tax plans that would substantially increase the national debt over the next 10 years," warned the TPC. "Neither candidate's plan would significantly increase economic growth unless offset by spending cuts or tax increases the campaigns have not specified."

This year's federal deficit alone will be nearly $500 billion. The country's total debt, which includes annual deficits over time, is expected to top $10 trillion next year. With baby boomers starting to retire, the national demographics will only turn more unfavorable from a budget standpoint because of the higher cost of Medicare and other entitlement programs.

"Tax policy is important, but the government also has to do something on the spending side," said Moriarty.