Three Tax Realities: Romney v. Obama v. Fiscal Cliff

October 3, 2012 -- intro: When President Obama and Mitt Romney throw their first face-to-face barbs of the 2012 campaign during tonight's presidential debate, there is one topic that is sure to cause some sparks: taxes.

Obama's theory that "everyone should pay their fair share" will face off against Romney's belief that "lower taxes and a simpler tax code" is the way to go. Complicating the conversation is the looming "fiscal cliff" of tax hikes and spending cuts that takes effect at the end of the year unless Congress -- which is bitterly divided on the correct solution -- intervenes.

So what would the world look like under a Romney presidency? How would tax rates change under a second Obama term? And what would most Americans pay if taxmaggedon came to pass?

The answer is complicated as policy experts disagree on the effects of each proposal, particularly because Romney has put out few details on his plan.

But here's a look at what Americans' tax forms will be saying this time next year under the three futures facing the country: A second Obama term, a change of power to a Romney presidency or the much-feared fiscal cliff.

quicklist: 1title: Scenario: Obama Winstext: In an Obama tax world, 95 percent of families will pay the same amount of income tax as they do now. Their tax rates will stay the same and their deductions will be largely unchanged.

But for the 5 percent of American families who earn more than $241,900 per year, Obama's tax plan means a fairly substantial tax hike.

Individuals earning between $200,000 and $500,000 will pay about $3,300 more in federal income taxes in 2013 than they did this year. Millionaires will pay an additional $184,600 per year, on average, according to an analysis by the nonpartisan Tax Policy Center.

The Details:

Obama's tax plan extends the Bush Tax Cuts for all families earning less than $241,900, but lets the cuts expire for families earning more than that. The tax rate on income between $241,900 and $390,050 will be 36 percent, or 3 percentage points higher in 2013 than it was in 2012. Couples who earn more than $390,050 will pay a 39.6 percent rate on income over that amount. That is 4.6 percentage points higher than their 2012 rate.

The tax on investment income like capital gains and dividends will increase for individuals earning more than $200,000 and families who earn more than $250,000. Instead of a 15 percent tax rate, dividends will be taxed like regular income subject to the 36 percent rate above $241,900 and 39.6 percent rate above $390,050, and the rate on capital gains will increase to 20 percent. The rates will stay at 15 percent on incomes less than $200,000.

Two-thirds of Obama's tax hikes fall solely on millionaires, who will pay higher rates on their income, capital gains and dividends. The president also plans to increase the estate and gift taxes from 35 percent to 45 percent on estates worth more than $3.5 million. Currently, these taxes only apply to estates worth more than $5 million.

Obama would extend tax credits for the working poor, child care, and having children.

On the corporate side, Obama proposes lowering the corporate tax rate from its current 35 percent to 28 percent and eliminate credits and exemptions, such as those for oil and gas companies.