Think McCain and Vote Obama.

McCain has something right in the campaign. His slogan "Country First" should be aimed directly at the people of which Obama's tax cuts leave out. Take a little mathenatical walk with me...

You are a family making $250,000 take home a year. Let's say in 2005 you bought a $345,000 home at 5.75% interest with a 30 fixed loan. Your loan payment, if you put 15% down is $1750.72 before PMI, utilities, etc. With all the dealings lately, you've been getting nervous. Homes in your neighborhood won't sell, there is even talk of a few forclosures and your neighboor who bought a similar house at the same time you did, just sold for $245,000! Holy crap! That's a 30% depreciation! (I know that this is possible because the house we just bought was 345K in 2005 and we bought it for $245K.) That is a $100,000 LOSS over three years. You had been counting on the value to rise, you hadn't choosen this neighboorhood for the schools and had planned to move in 2010 to get your kids to the schools of your choice! Ahhhh!

No fear, Obama has a plan that will raise your taxes and save your house. WTF? Obama's plan is to give a tax cut for families filing with an AGI of $95,000 or lower, keep taxes where they are for those with $95,001 to $249,999 and raise taxes for $250,000 or higher families--how is that going to help me you say. Tis an outrage! I already pay 35% in taxes, this isn't fair!

Have I mentioned what the tax increase would be? 2%. 2 percent of $250,000 is $5,000. Now, $5,000 is not a small chunk of change--2% for me is $880--I know that money is a difficult thing to part with, especially when you are already feeling the pinch of the bad economy. However, think about it like this:

In addition to cutting wasteful spending (as both parties want to do) Obama wants $5,000 more a year from you in order to revive the economy. Not fair again you say! I've done my part, paid my mortgage, and all I am seeing is falling home prices and plummeting 401Ks! But listen to McCain "What's good for the Country is good for you". Chances are whatever you do to make your 250K is middle class dependant. Fair? If the middle class is doing well, your business makes more and you get raises. More money--hooray! However, when the middle class is doing poorly we all suffer. Even the economy. That is what is going on right now.

Normal middle class families are not able to make ends meets. Befuddled with all that's happened with the financial crisis, the economy is fragile and the middle class needs help. The best way to help is to provide government assistance from job creation, to mortgage programs, to straight out stimulas packages. Those things require money. So, let's call that $5K a year an investment in the middle class.

An investment in the middle class would mean more people working (economy up). An investment in the middle class would mean more spending (economy up). An investment in the middle class would mean less people are losing their homes (economy up). If more people are working, there is more money to be spent. The more money spent, the more profitable businesses are, the more profitable businesses are, the more money for more jobs and more raises! Hooray!

But most of all, it would affect the housing crisis. If John and Susie down the street don't sell for 20% loss but actually LOSE their home, your home price will take a bigger fall than 20%. If John and Susie get some government assistance to keep their home, it's in your best interest. Let's say the tax cut lasts for Obama's presidency and the next, that's $5K a year for 8 years. That's $40,000. That's a rough number to deal with. You know what's more rough? The 30% or $100,000 your home has already tumbled. With a stable middle class home prices will rise again and you won't end up owing more on your house than it's worth--something everyone is at risk for, not just those with sub-prime or ARM loans.

So, to end our mathematical journey, at the end of 2016 you've paid $40,000 more in taxes than you would have if the tax laws stayed the same. However, your home price stabilized and you sold it at cost in 2010. You didn't come away with the profit you hoped, but you did get your kids to the schools you wanted. You walk away with a total loss of $40,000 over 8 years. The possibility of not stabilizing the middle class and re-energizing the economy could have cost you at least $20,000 more--see below.

Let's say under McCain you got a 2% tax break, so over the next 8 years you made $40,000 more than today's taxes. However, $40,000 for every 250k and over ended up putting a burden on the economy and although your home price stayed where it was in 2008, you ended up selling for a loss of $100,000. Thus, making your total loss $60,000 at the end of 2016.

The chart version for the visual learners.

Obama McCain
-$345,000 house purchase price in 2005 -$345,000 house purchase price in 2005
+$345,000 house sale price in 2010 +$245,000 house sale price in 2010
-$40,000 tax increase from 2008-2016) +$40,000 tax increase from 2008-2016
-------------------------------- --------------------------------
-$40,000 total profit/loss -$60,000 total profit/loss


So all you fiscally conservative high earners, when you go to the polls, think McCain and vote Obama.