Americans for Tax Reform and Rutledge Capital Release Version 2.0 of Obama-McCain 401(k) Tax Calculator
McCain Plan to Cut the Capital Gains and Dividends Rate in Half Grows Every American’s Nest Egg
WASHINGTON, DC—Americans for Tax Reform (ATR) and Rutledge Capital today announced the release of version 2.0 of the “2008 Election 401(k) Tax Calculator.” This change reflects a new tax cut introduced by Sen. John McCain (R-Ariz.): cutting the capital gains and dividends tax rates in half.
ATR, in partnership with Rutledge Capital, launched the 2008 Election 401(k) Tax Calculator so that Americans could input the value of their nest egg and see what effect various tax policy changes had on their 401(k) value.
The four scenarios and their outcomes for a $100,000 401(k) are:
- McCain: cut the corporate rate to 25%, the capital gains and dividends rates to 7.5%, and replace depreciation with capital equipment expensing
401(k) increase = plus $46,100
- Obama: raise the capital gains and dividends rates to 20%
401(k) decrease = minus $5,700
- Hill Dems: raise the capital gains rate to 28% and the dividends rate to 39.6%
401(k) decrease = minus $18,700
- ATR Plan: cut the capital gains and dividends rate to 0%, cut the corporate rate to 25%, and replace depreciation with capital equipment expensing
401(k) increase = plus $57,600
“This election may prove to be the “401(k) Election,” said ATR President Grover Norquist. Obama doesn’t have a single proposal that would increase anyone’s 401(k) plan. With the market taking a bite out of people’s nest eggs, the last thing taxpayers need is a stock market-killing hike in the capital gains and dividends rate.”
While 401(k) plans are tax-advantaged and don’t pay capital gains and dividends taxes, raising and lowering those rates has the effect of making stocks more or less valuable. Since 401(k) plans hold stock mutual funds, a change in these key tax rates has a direct effect on a 401(k)’s bottom line.
The 2008 Election 401(k) Tax Calculator can be found at www.atr.org. Since it’s a widget, it can be uploaded on any blog or website, and has been accessed tens of thousands of times since its launch in October 2008.
Dr. John Rutledge is a leading economist who has advised several presidents, including the current administration. He also advises multinational corporations, financial institutions, and investors. He is the author of a new book, “Lessons from a Road Warrior."