- Days left

Republican Presidential Candidates: Which One Is Best for Your Wallet?

×
Republican Presidential Candidates which one is best for your walletFrom Herman Cain's 9-9-9 plan to Ron Paul's proposal to nix the income tax, the Republican presidential candidates have floated a range of ideas for jump-starting the U.S. economy. But will any of them jump-start your home's budget? To find out, we looked the proposals of the four front-runners and considered how they'd affect a family making the median income of $49,445 and paying the current effective tax rate of 14.3%. None of the candidates campaigns responded to our requests for comment.

How the Republican presidential candidates would affect your financesHerman Cain

The former CEO of Godfather's Pizza has suggested simplifying the tax code with his 9-9-9 plan: a 9% income tax, a 9% corporate tax, and a 9% federal sales tax.

On the income tax front, the idea's a winner for the average family, which would save about $2,620 in the shift from from a 14.3% effective tax rate -- about $7,070 in yearly taxes for the median household -- to a 9% rate, which would total about $4,450. But they'll get slammed by the sales tax. According to the Bureau of Labor Statistics, the average middle class family spends about 97% of its net income on food, housing, transportation, clothing and other necessities. Those expenditures would be taxable under Cain's plan, which would translate into a sales tax bill of about $4,316 for the average family. All told, the average family would face a minimum tax payment of $8,766 -- or roughly 17.7%.

And it could be much worse. Since the plan removes many of the deductions that middle class families depend on -- including tax breaks for mortgages and dependents -- there would be no escape from the full impact of Cain's tax levy.

In addition, tax law professor Edward D. Kleinbard estimates that the effective tax rate would move to 27% under Cain's plan because the proposal wouldn't allow corporations to deduct the cost of their employees' salaries. Employers would find other ways to get that money back -- likely by cutting wages or jobs. Kleinbard estimates that, under Cain's plan, the total tax cost to a middle-class family would be $13,350 -- almost twice the current level.

Upshot: Families will pay significantly higher taxes under the 9-9-9 plan.

How the Republican presidential candidates would affect your financesMitt Romney

The former Massachusetts governor's economic plan is pretty vague, and -- at least at first glance -- doesn't seem likely to make too much of an impact on the median family. In his voluminous Believe in America proposal, Romney promises to repeal Obama's health care reforms, end deficit spending, reform entitlements and balance the budget. As a boon to the middle class, he also promises to eliminate taxes on capital gains, dividends and interest for taxpayers who make less than $200,000 -- a move that would greatly benefit families with large amounts of disposable income.

His pledges on federal spending, however, could wind up hitting the middle class pretty hard. For example, he has promised to cut "nonsecurity discretionary spending" by 5%, or $20 billion. That broad heading includes everything from schools to water testing to road maintenance, so it isn't clear precisely which programs would get slashed, or how those cuts would affect the average family. At the same time, he intends to force China to float its currency, even threatening to assess tariffs on Chinese goods from his first day in office. While this move might be good for U.S. workers in the long term, it would immediately raise the prices of all Chinese-made products -- including those filling the shelves at Walmarts across the country.

Upshot: A Romney presidency could leave the average American family facing cuts to vital social services while trying to deal with much pricier consumer goods.

How the Republican presidential candidates would affect your financesRick Perry

If you live near oil, coal or natural gas reserves, a Rick Perry presidency could be promising. The Texas governor often emphasizes the positive impact that oil jobs have had on his state. To revitalize the U.S. economy, he has proposed opening the nation's fossil fuel deposits to unhindered exploration and development, a process that, he argues, would create "1.2 million good American jobs." This would be paired with a massive scale-back in the Environmental Protection Agency, which currently regulates much of America's fuel exploration and development.

Beyond energy jobs, Perry's vision for the middle class gets a bit vague. As governor, he lowered Texas' corporate and property taxes, and initiated policies that made it harder to sue companies. These moves, which he credits with creating a "job climate consistently ranked the best in the nation," would likely see a nationwide implementation were he to win the White House. Combined with his proposal to scale back the EPA, this suggests a future in which suing the local power company, natural gas driller or other business would be extremely difficult. So while mining jobs would be more plentiful, so would polluted streams and unsafe work sites.

Upshot: A Perry presidency would be great for energy jobs, but the environment -- and your health -- could take a hit.

How the Republican presidential candidates would affect your financesRon Paul

Some of Ron Paul's ideas would be a huge boost to the middle class. He has proposed eliminating income taxes, and has suggested that he wants to allow younger worker to opt out of payroll tax programs like Social Security and Medicare. In other words, most of the $7,070 that the median American family currently pays would stay in their pockets. He has also proposed abolishing gas taxes, which currently average 49¢ per gallon.

That extra money would come in handy, as Paul also plans to scale back or eliminate many government services that families currently rely upon. For example, families with school-age children might not appreciate his move to dissolve the Department of Education, which administers the student loan program and provides federal funding to schools. For that matter, homeowners struggling to fight foreclosure and people who rely on federally-funded housing might also miss the Department of Housing and Urban Development, which administers anti-foreclosure programs and funds low-income housing. Finally, those who chose to opt out of Social Security and Medicare might want to start saving their pennies, especially if they plan to grow old.

Upshot: A Ron Paul presidency would be great for your family's bottom line, as long as you don't rely on the federal government for anything.

Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

Increase your money and finance knowledge from home

Goal Setting

Want to succeed? Then you need goals!

View Course »

What is Inflation?

Why do prices go up?

View Course »

TurboTax Articles

Video: How to Claim the Affordable Care Act Premium Tax Credit (Obamacare)

The Affordable Care Act Premium Tax Credit is a new refundable tax credit that can lower your monthly health insurance premiums. If you qualify for the tax credit, you can claim the Premium Tax Credit throughout the year to lower your monthly health insurance premiums, or claim the credit with your tax return to either lower your overall tax bill or increase your tax refund.

Cities With the Highest and Lowest Taxes

Geography has a lot to do with personal finance, and where you live in the United States has an impact on your annual tax burden. While federal income taxes are assessed in a consistent manner coast to coast, state and municipal taxes, such as sales and property taxes, vary widely.

When the IRS Classifies Your Business as a Hobby

If your business claims a net loss for too many years, or fails to meet other requirements, the IRS may classify it as a hobby, which would prevent you from claiming a loss related to the business. If the IRS classifies your business as a hobby, you'll have to prove that you had a valid profit motive if you want to claim those deductions.

Hurricane Sandy Tax Relief

Several tax provisions were put in effect to help taxpayers who live or do business in areas affected by Hurricane Sandy - but a number of those provisions expired on Feb. 1, 2013.