Taxes - Clarification

My friend Raleigh has inspired me to do additional research on some of the items I posted previously regarding McCain and Obama's tax plans. As a result I find a need to post some clarification info.

Some interesting additional background: John D. Dingell (D-Mich.), the chairman of the House Energy and Commerce Committee, will likely introduce the “carbon tax” bill when Congress returns next month. Harney writes, “Besides imposing hefty new federal taxes on gasoline, the forthcoming bill would, in Dingell’s words, seek to ‘remove the mortgage interest deduction on McMansions — homes over 3,000 square feet.’ Dingell said he recognizes that such a proposal will spark much criticism, but he also said it is essential to reducing carbon emissions by 60 percent to 80 percent by 2050.”

I have been able to do some real research on the home sale item though. And what I blogged before is technically incorrect - there seems to be a mixup between Rep. Dingell's "McMansion" suggestion, and Obama's capital gains plan. Here's the real deal...

For a primary residence only, if you own a home and sell it for a profit you are not taxed on the first $250k of profit (single) or $500k (married). Obama is keeping that exemption just like McCain, but he's increasing the Capital Gains tax for profits beyond those amounts.

The true difference lies in the Capital Gains tax plans of both candidates. Capital gains affects EVERY investment in which you make a profit - whether that is house, stock, IRA, dividend payments, etc. HOWEVER, in a related Democrat policy initiative, Nancy Pelosi definitely HAS stated publicly her desire to place additional taxes on gains which would affect retirement fund earnings:

Madam Speaker, Nancy Pelosi, wants to put a Windfall Tax on all stock market profits. This by definition includes, Individual Retirement Accounts (IRA), 401Ks and Mutual Funds (We already are taxed on Savings Accounts Interest and Investment Dividend Income).

I quote her,"We need to work toward the goal of equalizing income in our country and at the same time limiting the amount the rich can invest." When asked how these new tax dollars would be spent, she replied, "We need to raise the standard of living of our poor, unemployed and minorities." She continues, "For example, we have an estimated 12 million illegal immigrants in our country who need our help along with millions of unemployed minorities. Stock market windfall profit taxes could go a long ways to guarantee these people the standard of living they would like to have as 'Americans'." (Wow! What about the standard of living I would like to have as a law-abiding, hard-working, tax paying citizen???)

Now please keep in mind, I am not perpetuating the myth/hoax about a tax specifically on retirement. No. I'm referring again to CAPITAL GAINS taxes. The gains your retirement accounts make based on the reinvestment of dividends earned, and any profit gained by the fund managers through their buy/sell activities, can be taxed for Capital Gains beyond just normal income tax after you retire and begin taking disbursements from it. So, assuming your 401k and IRA exceed $250k in profits/gains by the time you retire (and I certainly hope they do or you probably won't be retiring), the Dems want to add about 13% more capital gains tax on top of the 15% you are already obligated to pay under current legislation.

McCain intends to leave the long-term capital gains tax at 15%. Obama intends to raise it to 25% to 28% for taxpayers reporting income of $250k or more per year. I'm sorry, I've been unable to find out if that's the rate for single income or a couples combined income.