It may be of great interest to voters whether Sen. John F. Kerry was or was not a war hero. That certainly seems to be the issue of the day.
But when it comes to real personal impact, rather than comparing the military records of Kerry and President Bush, Americans may find it more meaningful to weigh the Democratic presidential candidate's tax proposals against those of the Bush administration.
Kerry has pledged to preserve the Bush tax cuts that went to the middle class, but to roll them back for the wealthy. But, since most of us define ourselves as middle-class and define "wealthy" as "having more money than I do," it may not be immediately clear whose taxes Kerry would raise and whose he wouldn't.
Deloitte & Touche, one of the Big Four accounting firms, has taken a shot at figuring that out. Using Internal Revenue Service figures from 2001 (the most recent available), Deloitte's number-crunchers have concluded that this is a dogfight at high economic altitude.
Essentially, said DeLoitte's Clint Stretch, "the battleground for the two plans is how Bush and Kerry treat families and individuals with income over $200,000."
This is because Kerry would repeal cuts only for taxpayers in the top two tax brackets, currently 33 percent and 35 percent. Those would go back to 36 percent and 39.6 percent, their levels before the 2001 tax cuts.
The lower of those two brackets kicks in at $178,650 of taxable income for married couples this year ($146,750 for singles); it is only at that level that the Kerry plan begins to bite. The higher bracket begins at $319,100 for both couples and singles. Kerry says he "won't raise taxes for families making less than $200,000," so some adjustment in what would become the 36 percent bracket may be necessary.
The accompanying chart shows how the Bush and Kerry plans might play out for some taxpayers. However, keep in mind that the tax laws are very complicated and what an individual actually pays is very much related to his or her exact financial situation.
You can debate the merits of the two candidates' philosophies -- Bush's that the wealthier pay a disproportionate share of federal income taxes and deserve the relief; Kerry's that they receive a disproportionate share of the income and can afford to pay -- but the demographics are very much with the Democrat: Of roughly 130 million individual tax returns filed, only about 2.5 million reported income in those brackets, Stretch said.
Those taxpayers would lose three-quarters or more of the benefits provided by the Bush cuts. The part that survives, Stretch said, comes largely from changes to the lower brackets, which mean that more of a taxpayer's income is taxed at the lower-bracket rates.
The Kerry camp has indicated that their man would like to raise rates on dividends and capital gains as well. Currently, most such investment income is taxed at no more than 15 percent, whereas before 2001 dividends were taxed as ordinary income, meaning rates could go as high as 39.6 percent, while capital gains on assets held at least a year were taxed at 20 percent.
Such changes would also affect primarily the wealthy, though unlike the rate changes, they would boost the taxes of not-so-rich investors as well. There are now even lower rates for dividends and capital gains earned by lower-income taxpayers, so it's possible Kerry will seek to restore the high rates only for the wealthy. He has not yet laid out all the features of his plan.
And neither Bush nor Kerry shows much zeal for a long-term solution to the alternative minimum tax, which is, in the words of experts at the Tax Policy Center of the Urban Institute and the Brookings Institution, "on track to affect over 29 million American taxpayers by 2010, including most upper-middle-income households with children."
Check 21 petition: In October, a new federal law will allow banks to stop shipping canceled paper checks around the country and instead convert the checks into electronic form and zip them along that way. A consumer who needs a canceled check will be able to get a "substitute check," an image of the check that will have the same legal standing as the original.
Banks strongly favor the law, but Consumers Union and the Consumer Federation of America argue that the increased processing speed means bank customers "will be more likely to bounce checks and may find themselves paying higher fees" for various services. The consumer groups are urging consumers to join in signing a petition asking banks to make the new law more "consumer friendly."
Their hope is to persuade banks to speed up crediting of customers' deposits the same way the new law, known as Check 21, will speed the debiting of consumers' accounts when they write checks. Also, the groups would like banks to suspend bounced-check fees for a couple of months after the law goes into effect in October, refrain from charging extra fees for substitute checks, which take the place of a canceled check, and generally not use the new law to take advantage of customers.
Consumers can sign the petition online at http://cu.convio.net/check_21.
Savings bond deadline: Tuesday is the last day that holders of Series E and EE U.S. Savings Bonds can exchange them for Series HH bonds. The HH bond is being discontinued -- for lack of consumer interest, according to the Treasury Department -- cutting off an avenue that holders of maturing E and EE bonds have sometimes used to defer income taxes on their accrued interest. E and EE bond interest isn't taxed until the bond is redeemed, and rolling such bonds over into HH bonds is not treated as a redemption. Currently, EE bonds pay 2.84 percent and HH bonds 1.5 percent, so holders of EE bonds that have some time to go to maturity have to weigh the tax benefits of an exchange against the interest reduction. To get an exchange done, a bondholder must get a Form PD F 3253 "Exchange Application for U.S. Savings Bonds of Series HH" fully completed, properly signed and certified by a qualified savings bonds agent, typically a bank, for forwarding to one of the federal reserve banks that process bonds by the close of business Tuesday.