SEARCH
Obama’s Tax Plan Better for Working Families Than McCain’s
As the Republican Convention continued Tuesday night, former Sen. Fred Thompson (R-Tenn.) brought out a tired old talking point in his speech, one that Sen. John McCain and his allies have been pushing all year and that corporate interests have been trying to sell for decades. It’s the old “tax hike” scare.
Thompson and McCain are flat-out wrong when they allege Sen. Barack Obama‘s proposed economic plan would raise taxes on millions of working families. In reality, his plan would give tax cuts to nearly all working families.
 |
|
| Source: The Washington Post |
The Tax Policy Center has done intensive analysis of the two candidates’ tax proposals and their public statements and found that the majority of taxpayers would see more relief from Obama’s plan than McCain’s. The Washington Post has created a chart that explains exactly what each candidate’s tax plans would mean for different income levels, and the analysis points to stark differences.
Obama’s plan gives the biggest cuts to those who make the least, while McCain would give the largest cuts to the very wealthy.
There’s even a website, ObamaTaxCut.com, where you can calculate the estimated tax cut Obama’s plan would give you—and compare it to what you would see under McCain’s plan.
Obama’s plan gives tax cuts to 95 percent of working families. The overwhelming majority of taxpayers would see a bigger tax cut under Obama’s plan than McCain’s. As The Washington Post chart shows, 60 percent of taxpayers would get a tax cut three times as big from Obama as from McCain. That’s real money in the pockets of hardworking families.
Meanwhile, McCain’s economic proposals are mostly built around expanding on Bush’s giveaways to the very rich and to corporations. As we’ve reported, economists are struck not only by the massive scale of the tax cuts and the incredible imbalance, but by the sharp reversal these plans represent from McCain’s positions just a few years ago. Rather than being a “maverick,” as his allies in Washington and the press love to call him, McCain, who initially opposed Bush’s tax cuts for the rich but now wants to make them permanent, has steered hard toward the Bush economic agenda.
CQ’s Politifact calls McCain’s position on taxes a “full flop,” and The Washington Post reported that McCain has moved sharply toward Bush and his party on the issue.
Now that he is the presumptive Republican presidential nominee, however, McCain is marching straight down the party line. The economic package he has laid out embraces many of the tax policies he once decried: extending Bush’s tax cuts he voted against, offering investment tax breaks he once believed would have little economic benefit and granting the long-held wishes of tax lobbyists he has often mocked.
In 2004, McCain opposed tax giveaways during Bush’s first term because they went “disproportionately to the wealthiest Americans.” He repeatedly described his stance as a matter of conscience and fiscal responsibility. Apparently, presidential candidate McCain feels differently.
Who benefits from McCain’s tax agenda? The same people who have done so well under the Bush economy. The top five Big Oil companies would get nearly $4 billion. The top 10 insurance companies would get nearly $2 billion. And the millionaire McCain family would get a tax cut of more than $300,000.
Meanwhile, Factcheck.org has analyzed numerous McCain ads on the issue of taxes, and guess what it’s found?
McCain’s campaign is engaging in a “pattern of deceit” when it comes to describing Obama’s tax plan.
Factcheck.org says McCain’s ads on taxes are propagating a bundle of “false and misleading claims about Obama’s tax proposals,” while Politifact.com has analyzed multiple McCain ads on taxes and rated them “Barely True” or “False.” Obama economic adviser Brain Deese has released a video cutting through the false claims of a McCain ad.
The bottom line? Despite the claims of these attack ads, a sizable majority of America’s working families won’t see their taxes go up under Obama. They’d see them go down, and by more than they would under McCain.
Scratch below the surface of McCain’s policy proposals, and you’ll find these false tax claims are even more cynical and misleading than they seem at first. McCain’s health care proposals have their own tax consequences—in short, the McCain health care plan could actually raise taxes on millions of America’s working families by taxing their employer-provided health benefits.
Joe Klein of Time noted that “even the slightest wisp of substance” was missing from last night’s Republican Convention speeches, and The New Republic’s Jonathan Cohn said that the convention seems to be:
…all about who McCain is rather than what McCain would actually do in office. And I suspect that’s largely because McCain’s agenda just isn’t very popular. Remember, this is a candidate that has committed himself to an economic policy that would tilt the tax code more to the rich, a health care policy that would expose the sick to larger medical bills…. Polls have consistently shown that most voters disagree with these positions.
Maybe that’s why McCain’s campaign manager Rick Davis is trying so hard to convince the press and the public that “this campaign isn’t about issues.” If it’s an argument about the facts, about working people’s lives and the policies we need to help them prosper, McCain isn’t offering anything new.
 |
Become a Fan on Facebook |  |
Follow Us on Twitter |  |
Subscribe to YouTube |  |
Subscribe to Blog RSS | ||||
8 Comments
Sorry, the comment form is closed at this time.
This just demonstrates how ridiculous the tax system is. EVERYBODY is paying to much taxes! Why should the wealthy be expected to pay 60% of their income in taxes. We need to throw the whole tax code in the trash and have a national sales tax or a flat tax of some kind.
That’s all the money the government gets to spend, so then you take care of the citizens of this country first and forget everyone else. Very simple, government gets smaller and we have more liberty. With less government and more liberty we all prosper.
To bad that model doesn’t fit with the socialism and redistribution of wealth mindset of the democrats.
Seems like Obama has a better grasp of the concept; “For unto whomsoever much is given, of him shall be much shall be required: and to whom men have committed much, of him they will ask the more.” Luke 12:48
Good luck at trying to wrestle the “moral high ground” away from our candidate with arguements like those. I can’t imagine why the Christian Right would have a problem with Obama’s tax policy. McCain’s tax agenda is the one in moral conflict with the teachings of the Bible.
I don’t know how religion fits into any discussion on tax proposals. And as far as a moral high ground what’s up with that? Government is to big and we all pay to much in taxes, it is an easy concept from a Libertarian point of view.
The Stanford Encyclopedia of Philosophy states “libertarianism holds that agents initially fully own themselves and have moral powers to acquire property rights in external things under certain conditions.” It notes that libertarianism is not a “right-wing” doctrine because of its opposition to laws restricting adult consensual sexual relationships, drug use or imposing religious views or practices or compulsory military service. However, it notes there is a version known as “left-libertarianism” which also endorses full self-ownership, but “differs on unappropriated natural resources (land, air, water, etc.).” “Right-libertarianism” holds that typically such resources may be appropriated by individuals. “Left-libertarianism” holds they belong to everyone and must be distributed in some egalitarian manner.
The ease of one’s conception, as you suggest, all depends on whether you are a right or left libertarian. If I were one, I would be of the left persuasion favoring an egalitarian distribution.
Main Entry: egal•i•tar•i•an•ism
Pronunciation: \-ē-ə-ˌni-zəm\
Function: noun
Date: 1905
1 : a belief in human equality especially with respect to social, political, and economic rights and privileges
2 : a social philosophy advocating the removal of inequalities among people
I am not suggesting that the rich pay a higher tax rate as a means to remove economic inequality, no more than I am certain you would suggest that the poor hoard up all the poverty unto just themselves. It is in this context that a moral high ground is applied for the implementation of a plan for economic equality; for the rich and poor…and everyone in-between.
I suppose if our Government were as small as you have advocated it to become, earlier last century; we would all be speaking Russian or German and wondering if it would ever be possible to land a man on the moon. Big endeavors that contain immense obstacles are only conquered by Big Governments, like the United States of America or the Kingdom of God for instance. (Which according to another one of your statements below; you count each as an enemy.)
We could go on and on with this “High Minded” tennis match. In the end I will continue to agree to disagree with your, as still as yet, unproven political and economic philosophies.
The majority of people would not benefit from a flat tax. Republican supporters of this love to pretend that everyone will only pay 17% in taxes if this is the tax system, but many other sources say it will have to be significantly higher if the government’s budget is to maintain its current level. If we go to a strictly sales tax, this also does not benefit the majority of Americans and also cannot in anyway be called fair. Since most items people purchase are items they need to buy anyway and are basic goods, they will end up paying significantly more taxes in terms of a percentage of their income than the wealthy. I personally don’t see how people can argue it is more equity if everyone pays the same amount of tax when there is such disparity in income. Yes, I do believe it is perfctly reasonable for those in the top 1% of our population to pay 60% plus in taxes – because it still leaves them with an amount post taxes that is at least 3 times what the median income is.
Smaller government does not equal more freedom for individuals, who lose the social safety net and protection provided to them through taxes that they pay, but only more freedom for the wealthy and large corporations to exploit the rest of us whose labor earns that money for them. We have a vote in government and government spending is our money in the form of taxes coming back to us in the form of programs and benefits. Government is not the enemy, big business is. Corporations have no accountability to the people and when our money goes to them to purchase goods and services, it doesn’t come back to us, it stays as huge profits to the owners.
I also don’t understand your last sentence – exactly what is wrong with that? More socialist policies and redistribution of wealth would benefit the greatest portion of our population. And it certainly doesn’t lead to less freedom – look at European countries with more socialist governments – they have less censorship and more personal freedoms than we do – the Patriot Act is just one such example of a policy under a Republican administration that could never fly in these awful socialist countries you speak of, where personal freedoms are respected.
Government is the enemy and the Patriot Act is just one example. I believe it was a bipartisan effort. Our government wants to make social security benefits available to illegal aliens, one of those wonderful social safety nets.
We should do away with all censorship and legalize all drugs. That would free up 10 billion a year from the war on drugs and also add a consumption tax for another vice.
It is human nature to want to remain a child and be taken care of until we are forced to become an adult. That is what socialism encourages. We already have a big enough problem with the victim mentality in this country, I for one do not want to continue any further in that direction.
There are two levels at which voters should compare Obama’s and McCain’s tax proposals. First, they should look at how the respective proposed tax cuts are distributed, which the blog does very well. McCain gives his biggest cuts to upper income taxpayers; Obama gives his to the middle class.
Second, voters should look at how the tax system affects the availability of high wage jobs even before workers are required to pay taxes on those wages. This second level is far more important to the average worker — but far less visible.
There are two ways in which our current tax system depresses both the availability of American jobs and US wage levels.
First, Congress occasionally gives businesses tax incentives to buy equipment. It did so, for example, from September 2001 through December 2004 or, for longer-lived equipment, through December 2005. Unfortunately, equipment purchase incentives depress the demand for labor. As a result, seasonally adjusted nonfarm employment fell for almost three years after the 2001 incentives went into effect, despite the fact that GDP rose by 8% over the same period. Similarly, inflation-adjusted weekly earnings in the private sector remained flat from 2001 through 2005, recovering only after the tax system’s heavy thumb came off the scales.
As part of the “economic stimulus” package enacted in February of this year, Congress authorized additional incentives for equipment purchased before the end of 2008. (I understand that these incentives were inserted at the President’s insistence. In return, Democrats got the individual rebates.) Since then, both seasonally adjusted nonfarm employment and inflation-adjusted weekly earnings in the private sector have fallen every month. We should expect more of the same through the end of the year.
A second way in which our tax system depresses American jobs and wages is through the interaction of our rules with the tax systems of other countries. This interaction is too complex to explain in a blog comment. Suffice it to say that, all else being equal, corporations are typically taxed at lower overall rates if they locate their productive capacity outside the United States. This is true even if costs are otherwise equal here and there.
The U.S. rules in question have been in place for almost a century. Until the free trade movement took hold, however, they weren’t a problem; customs duties provided an offsetting incentive to keep productive capacity here. Only very recently has anyone begun to realize that there is a problem.
So what do the two candidates propose to do about all this?
McCain proposes to offer much larger equipment purchase incentives to business for the duration of his administration. If he gets his way, we should experience another extended period in which jobs are hard to get and wages remain flat or go down. Business will be ecstatic, but the average American family will find life increasingly difficult.
His proposed solution to the international tax problem is to cut corporate tax rates while broadening the corporate tax base. Depending on how he does it, this may reduce the size of the problem somewhat; the problem itself, however, will still remain.
Bottom line: If McCain’s proposals are enacted, the average American worker should prepare for a rough four years. This is true regardless of the size of the tax cuts he gives to those same workers.
Obama’s proposed tax package is radically different in this regard. First, he does not proposed new or continued equipment purchase incentives. Second, his goal is to eliminate, once and for all, US tax incentives to offshore jobs.
Bottom line: If Obama’s approach is enacted instead, I would expect jobs to become much more plentiful and average wages to rise. Again, I would expect this regardless of the size of the direct tax cuts given to individuals.
Businesses understand all this. Generally, workers don’t. That’s why a candidate like McCain can safely propose what he has proposed without suffering any significant voter backlash.
The author of this comment teaches tax law and policy at Loyola Law School, Los Angeles.
Thanks for the brief but detailed explanation of both proposals. This demonstrates how the average voter is at the mercy of sound bites and catch phrases on all political issues unless they take the time to do some research. Your explanation also shows how complicated our tax laws are. In your opinion what is the simplest and most fair way to improve our tax code? Do you agree that government is to big and spends to much?