On many rural issues, this year's presidential candidates differ greatly in how to address rural
On TAX POLICY
McCain: Sen. John McCain says he will keep the top tax rate at 35%, maintain the 15% rates on dividends and capital gains, and phase-out the Alternative Minimum Tax. He also wants to cut the corporate tax rate from 35% to 25%. His plan also includes a first-year deduction, or "expensing" of equipment and technology investments.
Obama: Sen. Barack Obama says his plan would provide a tax cut for 95% of households and simplify the tax code. He supports a repeal of the estate tax for 99.7% of estates. For the remaining 0.3% of estates that have more than $7 million per couple, he would retain a rate of 45%. "This policy would cut the number of estates touched by the tax by 84% relative to 2000," Obama said. In regard to capital gain, Obama plans to maintain the current rate for families with incomes below $250,000. Those in the top two income brackets would pay a new rate of 20%, which is equal to the lowest rate that existed in the 1990s and the rate that President Bush proposed in 2001.
Bottom line: Roger McEowen, ag tax specialist at Iowa State University, explained from a purely political standpoint, the Democrats could be expected to not allow McCain to continue the 2001 and 2003 tax cuts (which need legislation to continue), but the Democrats would not likely oppose Obama if he were to choose to continue the tax cuts. The question is whether he would, McEowen said. "Failure to continue the tax cuts would result in a huge tax increase, with the bulk of the burden hitting the middle-to-low income ranges."
Specifically on Obama's statement regarding tax relief to 95% of household, McEowen said it isn't possible. "The tax burden on the bottom 50% of tax filers is only 2.99%. So a significant number of taxpayers don't pay any federal income tax to begin with. How can he reduce zero to zero?"
McEowen added that if Obama raises capital gain taxes, it would provide a further disincentive for investment in U.S. capital, especially as the
On AGRICULTURAL SUBSIDIES
McCain: McCain says he supports a risk management program for farmers. However, he does not support the current model of legislating target prices for counter-cyclical payments because it "does little to help farmers in a marketplace where the cost of inputs exceed the target price schedules." He also opposes "subsidies that distort markets, artificially raise prices for consumers, and interfere with
Obama: Obama supports "a robust safety net that targets assistance appropriately and provides farmers with risk mitigation tools that protect them from weather and market conditions that are beyond their control. This includes traditional farm programs, crop insurance, and disaster assistance."
Bottom line: McCain has consistently voted against the farm bill, stating it is the wrong way to provide a safety net for today's farmers. He wants to encourage the market to do the work, while moving away from direct payments and the current crop insurance program. Obama on the other hand said he was "proud to support the 2008 Farm Bill" and both the permanent disaster program and ad hoc disaster assistance farmers have needed. The farm bill is written, but as shown by the Bush administration, it can have significant influence on how the law is implemented.
On HIGH INPUT COSTS
McCain: McCain says he believes in promoting and expanding the use of domestic supplies of natural gas. "Within the
Obama: A major key to stabilizing fertilizer prices is addressing the skyrocketing costs of natural gas, Obama states. "Through my policies for continued domestic production combined with investments in efficiency, we will take some of the pressure off the resource and increase supply, bringing costs down," he states.
Bottom line: Neither president will have much impact on high input costs in the short-term. However, the greater availability of domestic energy sources, the better chance of pulling prices down. And even though crude oil prices have slid considerably over the past few weeks, suppliers purchased fertilizer for application this fall at much higher prices and will have to pass those prices on to farmers. The spring may bring opportunities for softened fertilizer prices.
(From the original article in the October issue.)
McCain: He has been a strong supporter of trade his entire career. McCain says the
Obama: He takes a more left wing union position on trade with an emphasis on strong labor and environmental standards. Obama says the benefits of NAFTA were "oversold to the American people" and as president he will work to amend NAFTA. He also supported blocking the vote on the Columbia Free Trade Agreement.
Bottom line: Although both recognize the importance of trade to
McCain: McCain has been a critic of renewable fuels his entire career and the Republican Party platform went as far as to outline specifically a call for elimination of the Renewable Fuels Standard. He states in order to level the playing field he would work to "eliminate mandates, subsidies, tariffs and price supports that focus exclusively on corn-based ethanol."
Obama: Obama states he recognizes the growth of home-grown renewable fuels as one of the most exciting developments in agriculture and energy today. He says he "fully supports the policies that have fostered the development of the biofuels industry." Obama wants to increase the RFS and invest additional resources in cellulosic ethanol.
Bottom line: Obama gets high marks on his support for renewable fuels. McCain talks about broadening