Kerry's Take on Taxes

In early October, Sen. Kerry sponsored a bill that would raise the top tax bracket by an unspecified amount, a move intended to finance the rebuilding of Iraq. The proposal was to increase the top tax rate -- which applies to less than 1% of all taxpayers -- by an amount that would increase federal revenue by $87 billion over 10 years. That figure is what President Bush had asked Congress for at the time of Kerry's proposal.

A more intriguing example of Kerry's use of tax policy to effect real change in the uneven economic recovery is a package he drafted in November. The bill grants tax relief to small to midsized manufacturing companies that provide domestic jobs. "It approaches the issue from two or three different angles," Oschenschlager says. "It's a pretty sophisticated bill."

The bill, for instance, would provide a credit for wages paid for new employees. And to stimulate the growth of such small manufacturing companies, investors who make direct investments in the companies (as opposed to buying shares on the open market) will reap a huge tax break when they eventually divest. Those who hold stakes for a minimum of five years would be able to exclude 75% of any gain from taxes.

In the muddled realm of internet taxation (an issue that affects only state taxes), Sen. Kerry has straddled positions. He was an original supporter of the tax moratorium of 1998, which prevented tax on Internet access. On the subject of collecting state sales tax on products purchased online, Sen. Kerry has said that he does not want online retailers to have an unfair advantage over brick-and-mortar businesses, but also does not want to see online retailers burdened with unwieldy tax collection and distribution responsibilities.

Kerry has a ways to go before any campaign rhetoric becomes tax law, but some goals are clear. If elected, the 0.8% of taxpayers who are in the top income tax bracket will likely see their rate rise. The nebulous middle class will see some change, although how much or what form seems unclear. And small businesses will likely do well. Kerry's campaign team, though, failed to return several calls. Perhaps it's too busy developing policy.