The Effect of Election 2012 on Your Taxes

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With the election 2 months away, both Democrats and Republicans are spending the majority of their time trying to sway the last remaining undecided voters (as well as rallying their bases, of course). Both political parties are now fully embracing the idea that they and their policies are the best for the middle class.

Rhetoric being what it is, the matter is wide open to interpretation and “truthiness“. Both sides have waged an advertising campaign showing how much better their plan is. A clear answer emerged recently, when a detailed report by the nonpartisan Tax Policy Institute details the proposed Romney-Ryan budget and finds that middle class taxes would be much higher under a Romney administration. Download the full report here.

For an interesting comparison of what your taxes would be under the Romney plan, check out this tax calculator to find out how your tax situation would change under a Romney Administration. The calculator can really only be faulted for being a little oversimplistic, but the assumptions it makes are tailored to the grand majority of Americans:

Because the tax code is complex, the calculator makes a number of simplifying assumptions that may differ from the circumstances of any particular user. It assumes all income is from wages. For married filers, it assumes that income is split evenly between two earners. It assumes that income does not vary over the years analyzed. It assumes that taxpayers claim the standard deduction for the purpose of analyzing the impact of the expiration of the middle class tax cuts. The impact of Mitt Romney’s tax plan is based on an analysis by the nonpartisan Tax Policy Center, which determines the tax increase or tax cut the average family in each income group would face if Romney paid for his $5 trillion tax plan by cutting tax benefits. The analysis assumes that Romney eliminates all tax benefits, except those for savings and investment, for households earning over $200,000, and reduces those benefits for households earning under $200,000 to cover the rest of the cost – resulting in a reduction by more than half. The Tax Policy Center uses income thresholds based on “cash income”, a measure broader than AGI commonly used by TPC. The calculator is intended for information purposes only.

Go ahead and punch in your income and see what the average American who makes about what you make has saved in the last four years from Obama’s tax cuts for the middle class, as well as how your taxes would change under a Romney Administration.

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