*Estate tax: The estate tax is set to disappear in 2010 and return the next year under old rules. In 2011, you could shelter up to $1 million from estate taxes, and the excess would be taxed at a rate of up to 55 percent.
Both candidates would keep the estate tax but would allow you to shelter millions more from taxes.
Under McCain's plan, less than a quarter of 1 percent of all estates would be taxed, compared with less than one-half of 1 percent under Obama, says Clint Stretch, managing principal, tax policy at Deloitte.
*Alternative minimum tax: Neither candidate would do away with the alternative minimum tax, although they want to rein it in.
You're supposed to figure your taxes under the AMT and regular income tax and pay whichever is higher. The AMT was created decades ago to snag the wealthy who escaped taxes, but it ensnarls a growing number of middle- and upper-middle income families because the tax wasn't adjusted for inflation.
To protect these families, Congress periodically passes an AMT "patch" that raises the amount of income exempted from the AMT.
Obama wants to continue indexing the AMT patch for inflation. McCain would follow the same approach for five years, and then more aggressively raise the exemption until it reaches $143,000.
Ironically, McCain's proposal to double the exemption for dependents to $7,000 could cause more people to be hit with AMT, says Roberton Williams with the Tax Policy Center. "It lowers your regular tax but, because the AMT doesn't allow personal exemptions, it doesn't lower your AMT liability," he says.
*New tax breaks: Obama would create a few tax breaks, such as a $500 credit that could help workers offset payroll taxes for Social Security and a mortgage interest credit for millions of homeowners who don't file itemized tax returns.
He also would eliminate income taxes for seniors with incomes under $50,000. Some tax policy experts question the need for this, especially as waves of baby boomers will start turning 65 in a couple of years.
"The case has not been made that retirees are worse off than working people as a class," says Deloitte's Stretch.
McCain wants to make it harder to raise taxes. He would require that any tax increase be approved by a 3/5 majority in Congress.
While both candidates cut taxes, McCain's cuts reduce revenue significantly more than Obama's, reports the Tax Policy Center. But given the rising deficits, don't start counting your tax savings just yet.
"The odds are very low that either candidate will get all of what he is calling for on the campaign trail," Williams says.
eileen.ambrose@baltsun.com
