Americans fear higher taxes. Older conservative voters often discuss the taxes that they fear a Democratic President will levy on them. They fear that Democrats want to enact social progams that will redistribute wealth. They profess to prefer the way free markets distribute the wealth.

They don't seem concerned about business subsidies that redistribute wealth to richer citizens. They don't talk about contracting policies that ensure big government buys from big business. They don't consider the effect of regulation on competition and pricing. They don't consider monetary policy that causes inflation that eats into incomes and savings while the richest Americans employ wealth management strategies that profit from inflation.

The Tax Policy Center, one of those Washington Think Tanks reported on its comparison of the Obama and McCain income tax plans. You can see the summary numbers in the CNN graphic or read the entire 35 page PDF report in all its gory detail. What it shows is that neither candidate is proposing more taxes on any Americans with incomes below $250,000 per year.

In fact both candidates are proposing big income tax cuts for the vast majority of Americans.  McCain seems to think the richest Americans who pay the most taxes ought to get the biggest cuts so his plan offers tax reductions to everyone. Obama offers bigger cuts to poorer Americans but raises taxes for those with incomes over $250,000 per year.  Under Obama's plan the top 1 percent of Americans would see an 8.5% income tax increase and the top 0.1% (one in a thousand) would suffer an 11.5% hike. This would more than undo the benefit of the Bush tax cuts for those top earners.

Both plans reduce government revenue. Assuming current tax policy as a baseline,thus assuming continuation of the Bush tax cuts and AMT indexing, McCain's tax plan cuts revenue an additional $60 billion per year while Obama's increases revenue by $70 billion per year.  Given that the government budget is already in deficit, and neither candidate has offered credible spending reduction plans, either plan will increase the deficit and result in more inflation or more debt. Since government runs to excess, expect both. This will tend to offset the disadvantages of a tax increase to the wealthy.

What the Tax Policy Center fails to analyze is the effect of payroll tax changes. McCain has been silent on this issue while Obama intends to increase the cap with perhaps a lower percentage on higher incomes. Obama has also talked about a gap where payroll taxes are collected up to the current cap then not any more until $250,000 in income. John McCain is not proposing a specific solution, instead calling for a working group to solve the problem later much like Hillary proposed and what Reagan did with the Social Security Reform Act of 1983.

Another thing the Tax Policy Center fails to mention is the probability that Obama can actually get his plan enacted while McCain will be left fighting a holding action against an overwhelmingly Democratic Congress.

Finally the Tax Policy Center fails to mention that tax increases on the richest Americans often produce less revenue than expected. Why? Because with expert tax advice and planning, richer Americans are able to adjust their invtments to reduce their tax burden.

These plans purport to be for tax year 2009.