Tax letter lacking information

By Charles Martin Jr.

While reading the letter to the editor entitled “Obama’s tax policies bad for the economy” in the September 10th issue of The Daily Illini, I had to stop and pause for a moment. In his rush to use statistics in support of John McCain’s tax plan, the author of the letter forgot to mention some things about the statistics and about taxes in general.

Qualification #1: Although an individual or a couple may fall into one of the top tax brackets, they do not necessarily pay that income tax rate, and can even owe nothing in terms of a tax liability. This is due to the variety of tax exemptions allowed under the current IRS Code. For those who have ever filed their own tax return, they may have noticed a deduction for medical expenses, charitable contributions, and miles driven for volunteer work.

Qualification #2: Not all small businesses will be affected by Barack Obama’s plan to raise taxes on individuals earning more than $200,000 a year and couples earning more than $250,000 a year. The majority of the 23 million small businesses McCain refers to do not have a net income exceeding $200,000. It would be more accurate to say that less than 1 million small businesses would be affected negatively by the increase in taxes.

Qualification #3: Not all corporations pay the corporate income tax rate. Corporations also have their exemptions from tax liabilities. The Section 179 deduction is one such exemption, in which a corporation can reduce their tax liability by up to $250,000 by immediately depreciating fixed assets they purchased that year.

For those seeking further information, I recommend you talk to an accountant dealing with tax preparation.