10/19/2012 02:14 pm ET Updated Dec 19, 2012

What We Know About Obama's and Romney's Tax Proposals

No single question is of greater confusion so far in the political process than which candidate's tax plan is better for America, the majority of taxpayers, and better for you personally. Let's take a quick look:

President Obama's plan promises to:
  1. Cut taxes for the majority of taxpayers (or at least prevent taxes from going up) and raise taxes for taxpayers with incomes greater than $200,000 ($250,000 if married filing jointly)
  2. Pay for itself or even raise revenue
Governor Romney's plan promises to:
  1. Cut taxes for the majority of taxpayers, including the middle class
  2. Pay for itself or be revenue neutral

Numerous recent studies have tried to shed some light on the generic proposals without much success. The studies are based on assumptions about the two policies, as neither candidate has provided any detailed specifics on their own tax platforms. Adding to the confusion for voters, if you look hard enough you can probably find an "independent study" that supports your candidate's plan and proposal while debasing the other candidate's plan.

So what do we know about each candidate's position on taxes? Each of the candidate's proposal is based on high level information. For example, there are several loosely defined buzz words and terms to watch for as you think about the candidates' tax proposals:

  • Middle class -- how does each candidate define the middle class?
  • Tax simplification -- how does each candidate define tax simplification?
  • Tax cut/tax increase/tax savings -- these terms are loosely used and complicated because of the non-standard definition. For example if your taxes are scheduled to go up from $1,000 to $2,000 but a proposal says they stay at $1,000 -- is that a tax cut or just staying the same? The answer depends on your point of view and your pundit's spin.

Tax changes are coming regardless of who is elected. These changes will be based on the essential elements of each candidate's platform and consistent messaging being used:

  • President Obama -- higher income individuals will pay more in taxes
  • Governor Romney -- tax cuts for many individuals
  • Both candidates want a reduction in corporate taxes
  • Both candidates want tax simplification

The vast majority of taxpayers, whether your income is low, medium, or high, should watch the horizon after the election to see what actually passes, and to see how it impacts you.

As tax changes begin to occur and we move closer and closer to tax season, you'll want a reliable resource to help you understand it all. I'll certainly keep talking about these changes as they unfold and shed light on what it means for you.