In e-mail exchanges with one of my daughters, I've done my best to understand the tax proposals of the two candidates and their potential consequences. I've discussed some of what I've learned below, under "Responses to reservations." But I confess to not being an expert on the subject. I hope that whoever is elected, there will be serious discussion of whatever proposals are made, along with some tinkering and compromise. What follows is a short list of my reasons for supporting Obama's proposals, followed by indications from experts that these proposals are positive ones.
(1) Obama's main tax proposal is that taxes will not increase for those making less than $250,000 a year--in fact, for most, tax rates will be slightly lower--while tax rates will be slightly higher (raised from 36 to 39%) for those making over $250,000. These are not drastic changes. They certainly do not consitute
"socialism" (see below on that pseudo-issue). They aim at helping a struggling middle class. Helping the middle class may well do more to jump start and expand the economy than drastically lowering the rates for the wealthiest Americans, which is what McCain proposes.
(2) Obama's proposals also aim at helping small businesses, especially those just starting out. Capital gains taxes will be eliminated or reduced for small businesses. (By the way, 98% of small businesses make less than $250,000.)
(3) Obama also proposes tax credits for business making new hires, as long as the jobs remain in the United States. The aim, of course, is job creation. At the same time, he proposes reducing tax credits for business that ship jobs overseas.
(4) One reason for the Wall Street melt down was apparently lack of adequate oversight and regulation. McCain has argued for years for more deregulation; Obama was quicker to see the problems that were resulting from that approach.
(5) Though economists and CEOs differ on which candidate has the best plan, among those who prefer Obama are Warren Buffett and the CEO of Google. Note also the following:
Former Republican Senator Larry Pressler has endorsed Obama, saying: "I just got the feeling that Obama will be able to handle this financial crisis better, and I like his financial team of [former Treasury Secretary Robert] Rubin and [former Federal Reserve Chairman Paul] Volcker better." (See http://www.politico.com/news/stories/1008/14963.html.)
Charles Fried, Solicitor General under Reagan and until recently an advisor to the McCain campaign, has also endorsed Obama. Fried is a conservative Harvard economist. (See http://blogs.tnr.com/tnr/blogs/the_plank/archive/2008/10/24/reagan-appointee-and-recent-mccain-adviser-charles-fried-supports-obama.)
A general comparison of approaches to the economy may be found here: http://www.csmonitor.com/2008/1021/p09s01-coop.html.
Also, The Financial Times (a UK publication) has endorsed Obama (I note them here because it would seem they would know something about economics). Their endorsement (click here or here) is quite striking because, as non-Americans, the writers are able to be dispassionate and reasonably objective. (Late breaking news: Another UK publication, the highly respected journal The Economist, has also endorsed Obama: click here.)
The Financial Times does find one serious flaw with Obama's proposals--his statements against free trade. I've heard Obama say several times that he favors free trade but believes that free trade agreements need to include provisions that guarantee fairness. Assuming that his support of free trade is genuine and that the conditions he would set on agreements would not be unreasonable, then I'm OK with Obama on that issue as well.