McCain Camp Distorts Obama's Tax Policies, Exaggerates Their Adverse Impact
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Jun 11, 2008, 9:09:14 AM6/11/08
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From: http://www.washingtonpost.com/wp-dyn/content/article/2008/06/10/AR2008061003376.html
McCain Camp Distorts Obama's Tax Policies, Exaggerates Their Adverse
Impact
Wednesday, June 11, 2008; A04
Sen. John McCain's camp is attempting to convince Americans that their
taxes will increase dramatically with Sen. Barack Obama as president.
The presumptive Republican nominee has repeatedly said that Obama
would enact "the largest tax increase since the Second World War." A
surrogate for McCain, former Hewlett-Packard CEO Carly Fiorina,
insists that Obama has not proposed "a single tax cut" and wants to
"raise every tax in the book."
THE FACTS
There are significant differences between the two candidates on tax
policy. McCain would like to make permanent President Bush's tax cuts
of 2001 and 2003, and has proposed a few of his own. Obama favors
allowing the tax cuts to expire as scheduled for Americans earning
more than $250,000 a year.
He would raise taxes on capital gains and dividends, but has also
promised tax breaks for lower- and middle-income Americans. McCain's
speech to the Small Business Summit yesterday leaves the impression
that Obama favors raising taxes on all Americans. But his words have
been carefully parsed. A more literal reading suggests that he could
also be talking about some Americans from "every background," not "all
Americans." The key issue is how many lower- and middle-income
Americans would be affected by Obama's proposed tax increases.
To substantiate its assertion that large numbers of ordinary Americans
would be worse off under the Democrats, the McCain camp points to
Obama's proposal to raise tax rates on dividends and capital gains.
Obama's advisers argue that any tax increases would be offset by
credits for lower-income families. They also point out that most
middle- and lower-income families invest in the market through 401(k)
plans, which are exempt from capital gains taxes.
Maya MacGuineas, a budget expert at the New America Foundation, said
the McCain camp is trying to create an exaggerated impression of the
number of people from lower- and middle-income groups who would be
hurt by Obama's tax proposals. "It is legitimate to say that they can
find a cleaning person or a waitress somewhere who will be affected,
but the numbers should not be overwhelming," she said.
The statement that Obama would "enact" the largest tax increase since
World War II is also overblown. Bush's cuts will expire automatically
at the end of 2010, so it is hardly a question of "enacting" a new tax
increase. According to Obama economics adviser Jason Furman, the
revenue raised from letting the tax cuts expire would be returned to
middle- and lower-income taxpayers in the form of tax credits to pay
for health insurance, so the overall effect would be revenue-neutral.
McCain spokesman Brian Rogers pointed to an analysis by the
nonpartisan Annenberg Political Fact Check that found that the gross
tax increase would amount to $103.3 billion in 2011, the largest
single-year tax increase since World War II. The Annenberg study
pointed out, however, that "most economists" prefer to measure tax
changes as a percentage of gross national product, in which case it
would be the fifth-largest increase since 1943.
According to Brookings Institution economist Douglas W. Elmendorf,
Obama's plan would eliminate income taxes for 10 million Americans.
"It's very clear that taxes for lower-income Americans will decline
under Obama," he said.
THE PINOCCHIO TEST
Fiorina is wrong to assert that Obama has proposed no tax cuts and
wants to raise "every tax in the book." McCain is on more solid ground
when he says Americans from many backgrounds could be affected by a
rise in capital gains, but he has greatly exaggerated the adverse
impact.
ONE PINOCCHIO: Some shading of the facts; TWO PINOCCHIOS: Significant
omissions or exaggerations; THREE PINOCCHIOS: Significant factual
errors; FOUR PINOCCHIOS: Real whoppers; THE GEPPETTO CHECK MARK:
Statements and claims contain the truth, the whole truth and nothing
but the truth.
McCain Camp Distorts Obama's Tax Policies, Exaggerates Their Adverse
Impact
Wednesday, June 11, 2008; A04
Sen. John McCain's camp is attempting to convince Americans that their
taxes will increase dramatically with Sen. Barack Obama as president.
The presumptive Republican nominee has repeatedly said that Obama
would enact "the largest tax increase since the Second World War." A
surrogate for McCain, former Hewlett-Packard CEO Carly Fiorina,
insists that Obama has not proposed "a single tax cut" and wants to
"raise every tax in the book."
THE FACTS
There are significant differences between the two candidates on tax
policy. McCain would like to make permanent President Bush's tax cuts
of 2001 and 2003, and has proposed a few of his own. Obama favors
allowing the tax cuts to expire as scheduled for Americans earning
more than $250,000 a year.
He would raise taxes on capital gains and dividends, but has also
promised tax breaks for lower- and middle-income Americans. McCain's
speech to the Small Business Summit yesterday leaves the impression
that Obama favors raising taxes on all Americans. But his words have
been carefully parsed. A more literal reading suggests that he could
also be talking about some Americans from "every background," not "all
Americans." The key issue is how many lower- and middle-income
Americans would be affected by Obama's proposed tax increases.
To substantiate its assertion that large numbers of ordinary Americans
would be worse off under the Democrats, the McCain camp points to
Obama's proposal to raise tax rates on dividends and capital gains.
Obama's advisers argue that any tax increases would be offset by
credits for lower-income families. They also point out that most
middle- and lower-income families invest in the market through 401(k)
plans, which are exempt from capital gains taxes.
Maya MacGuineas, a budget expert at the New America Foundation, said
the McCain camp is trying to create an exaggerated impression of the
number of people from lower- and middle-income groups who would be
hurt by Obama's tax proposals. "It is legitimate to say that they can
find a cleaning person or a waitress somewhere who will be affected,
but the numbers should not be overwhelming," she said.
The statement that Obama would "enact" the largest tax increase since
World War II is also overblown. Bush's cuts will expire automatically
at the end of 2010, so it is hardly a question of "enacting" a new tax
increase. According to Obama economics adviser Jason Furman, the
revenue raised from letting the tax cuts expire would be returned to
middle- and lower-income taxpayers in the form of tax credits to pay
for health insurance, so the overall effect would be revenue-neutral.
McCain spokesman Brian Rogers pointed to an analysis by the
nonpartisan Annenberg Political Fact Check that found that the gross
tax increase would amount to $103.3 billion in 2011, the largest
single-year tax increase since World War II. The Annenberg study
pointed out, however, that "most economists" prefer to measure tax
changes as a percentage of gross national product, in which case it
would be the fifth-largest increase since 1943.
According to Brookings Institution economist Douglas W. Elmendorf,
Obama's plan would eliminate income taxes for 10 million Americans.
"It's very clear that taxes for lower-income Americans will decline
under Obama," he said.
THE PINOCCHIO TEST
Fiorina is wrong to assert that Obama has proposed no tax cuts and
wants to raise "every tax in the book." McCain is on more solid ground
when he says Americans from many backgrounds could be affected by a
rise in capital gains, but he has greatly exaggerated the adverse
impact.
ONE PINOCCHIO: Some shading of the facts; TWO PINOCCHIOS: Significant
omissions or exaggerations; THREE PINOCCHIOS: Significant factual
errors; FOUR PINOCCHIOS: Real whoppers; THE GEPPETTO CHECK MARK:
Statements and claims contain the truth, the whole truth and nothing
but the truth.
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