BarackObama Factcheck: Reality and Rhetoric on McCain's Tax Speech

[flpoljunkie]

http://factcheck.barackobama.com/factcheck/2008/06/10/mccain_tax.php

Rhetoric and Reality on McCain Tax Speech
June 10, 2008

MCCAIN RHETORIC: Obama Will Enact the Largest Tax Increase Since World War II. “No matter which of us wins in November, there will be change in Washington. The question is what kind of change? Will we enact the single largest tax increase since the Second World War as my opponent proposes, or will we keep taxes low for families and employers? This election offers Americans a very distinct choice about what kind of change we will have. This is especially true for the small business community.”

THE FACTS: BARACK OBAMA IS ACTUALLY PROPOSING A MIDDLE CLASS TAX CUT. JOHN MCCAIN WILL PROVIDE NEARLY $2 TRILLION IN CORPORATE TAX CUTS AND WILL MAKE PERMANENT THE BUSH TAX CUTS FOR THE WEALTHY. ORDINARY AMERICANS WILL ONLY SEE A SMALL FRACTION OF THE TAX CUTS JOHN MCCAIN IN PROVIDING.

Obama Will Provide Real Middle Class Tax Relief. Barack Obama is the only candidate who has a real middle class relief plan – he will provide $1,000 in a refundable tax credit to working families, create a universal mortgage interest credit for homeowners who cant benefit from a mortgage tax incentive available to wealthier Americans, and create a $4,000 college tax credit for middle class families.

McCain’s Tax Plan Will Double the Size of Bush’s Tax Cuts. According to recent study from the Center for American Progress Action Fund, “McCain’s three major new tax cuts – cutting corporate tax rates, expensing for corporate investment, and repealing the AMT – would cost the federal government more than $2 trillion in tax revenue over 10 years... They will approximately double the cost of Bush tax cuts.”

McCain’s Tax Plan is More Regressive than the Bush Tax Cuts; Nearly 60 Percent of the Benefits Go to the Top One Percent. As a study from the Center for American Progress Action Fund recently noted, “The McCain plan to cut corporate taxes and eliminate the AMT is very regressive as well as very expensive. The plan delivers the vast majority of its benefits to high-income taxpayers and very little to tens of millions of middle-class families. … The McCain tax cuts together are even more regressive than the Bush tax cuts. … The bottom 60 percent of tax payers get only 4 percent of the benefit, while the bottom 80 percent get only 9 percent.” The study also noted that the top 1 percent of income earners will receive 58 percent of the benefits of the McCain tax plan. By contrast, 31 percent of the Bush tax cuts went to top 1 percent of income earners.

McCain Supports the Bush Tax Cuts that He Once Said were “Too Tilted to the Wealthy,” and “Go to the Most Fortunate Among Us, At The Expense of Middle-Class.” In late 2007, McCain promised, “I will not let the Democrats roll back the Bush tax cuts.” During a January 2008 GOP debate, McCain said: “I think it’s very important that we make the Bush tax cuts permanent.” And on an episode of Fox News Sunday, McCain said, “We need to make Bush tax cuts permanent.”

McCain Said The Bush Tax Cuts Were “Too Tilted To The Wealthy, And I Still Do.” “In May 2001, Mr. McCain was one of only two Republicans -- the other was Senator Lincoln Chafee of Rhode Island -- to vote against President Bush's $1.35 trillion 10-year tax cut. … Later, he said he also opposed the 2003 tax cut because it, too, disproportionately benefited the rich. ‘I just thought it was too tilted to the wealthy, and I still do,’ Mr. McCain told Stephen Moore, a member of The Wall Street Journal editorial board, in an interview published on Nov. 26, 2005. These days, Mr. McCain says at almost every campaign stop that he wants to make those tax cuts permanent rather than have them expire, as the law stipulates, because getting rid of them would have the effect of a tax hike.”

McCain Said He Could Not “In Good Conscience” Support the Bush Tax Cuts That “Go to the Most Fortunate Among Us, At The Expense of Middle-Class Americans Who Most Need Tax Relief.” “I cannot in good conscience support a tax cut in which so many of the benefits go to the most fortunate among us, at the expense of middle class Americans who most need tax relief.”

MCCAIN RHETORIC: “Senator Obama’s plans would add to the difficulties of small business in other ways, too. Currently, there are the 21.6 million sole proprietorships filing under the individual income tax. When Senator Obama talks about raising income tax rates on those making over 250,000 dollars — that includes these businesses as well. He also proposes increases in dividend and capital gains taxes. Under Senator Obama’s tax plan, Americans of every background would see their taxes rise – seniors, parents, small business owners, and just about everyone who has even a modest investment in the market. He proposes to eliminate the Social Security earnings cap, and thereby to increase the tax on employers. He proposes to eliminate the secret ballot for union votes, and to raise the minimum wage and then index it, which is a sure way to add to your costs and to slow the creation of new jobs. You work hard in small businesses to grow and to create new jobs and opportunities for others — and the federal government shouldn’t make your work any harder.”

THE FACTS: OBAMA’S TAX PLAN IS FOCUSED ON RELIEF FOR WORKING AMERICANS, SENIORS AND SUPPORTING INNOVATION

Barack Obama Will Only Raise Taxes for Those Earning Over $250,000 Per Year: In an interview with CNBC, Barack Obama stated, “And I think that we have an economy that's been out of balance for too long, so the general principle of raising taxes on higher income Americans like myself, and providing relief to those who haven't benefited as much from this new global economy, I think is a sound one. And keep in mind on all of these proposals, what I've said is, let's make sure that we define the well-off so that we're not hitting the middle class, you know. I generally define well-off as people who are making 250,000 dollars a year or more. And that means, for example, if we raise the capital gains tax, I will exempt people who are essentially small investors, and really capture those who have done very, very well over the last two decades.”

Less than 2 Percent of Small Businesses Would be Affected by Rolling Back the Bush Tax Cuts on the Wealthy: According to the nonpartisan Tax Policy Center, less than 2 percent of individual tax filers who report small business income fall into the top two marginal tax rates.

Barack Obama is the Only Candidate to Propose Cutting the Capital Gains Tax Rate to Zero for Start Ups and Small Businesses: Barack Obama has stated, “As we make these changes, we'll be sure to encourage growth and innovation. So we'll exempt start-up companies and small businesses from capital gains to give them an added boost. Because when more Americans tap that well of opportunity, all of us are better off.” John McCain’s economic proposal lacks such a provision.

Barack Obama is the Only Candidate to Propose Tax Relief for Low and Middle Income Seniors: Obama will eliminate all income taxation of seniors making less than $50,000 per year. This will provide an immediate tax cut averaging $1,400 to 7 million seniors and relieve millions from the burden of filing tax returns. John McCain’s tax proposal lacks such a provision.

Obama Will Provide Real Middle Class Tax Relief. Barack Obama is the only candidate who has a real middle class relief plan – he will provide $1,000 in a refundable tax credit to working families, create a universal mortgage interest credit for homeowners who cant benefit from a mortgage tax incentive available to wealthier Americans, and create a $4,000 college tax credit for middle class families.

MCCAIN RHETORIC: “As president, I intend to act quickly and decisively to promote growth and opportunity. I intend to keep the current low income and investment tax rates. And I will pursue tax reform that supports the wage-earners and job creators who make this economy run, and help them to succeed in a global economy. Serious reform is needed to help American companies compete in international markets. I have proposed a reduction in the corporate tax rate from the second highest in the world to one on par with our trading partners; to keep businesses and jobs in this country.”

THE FACTS: MCCAIN’S TAX PLAN CREATES MORE CORPORATE TAX HAVENS

John McCain’s Tax Plan Creates More Corporate Tax Havens: According to the Center for American Progress, “…McCain would create a potent new form of tax shelter through his pro¬posal to provide for immediate expens¬ing of investments in equipment and technology. As Avi-Yonah explains in his forthcoming paper, because McCain’s plan does not end the deductibility of interest paid by corporations, his expens¬ing proposal will let corporations obtain negative tax rates—making investments that are not only tax-free, but that can also reduce taxes owed on other income. Corporations need only borrow to pur¬chase equipment or technology, deduct the interest payments on that loan, and then immediately expense the entire cost of the equipment or technology. This tax shelter will allow corporations, and individuals using the corporate tax form, to avoid hundreds of billions of dollars in taxes. This tax shelter would also erode the individual income tax base by giving individuals strong incen¬tives to organize their affairs through corporations.” <(PDF)Center for American Progress Action Fund, March 2008>

MCCAIN RHETORIC: “And as we expand markets for Americans products, we must do more tax reform here at home. I will propose and sign into law a reform to permit the first-year expensing of new equipment and technology. We’re also going to keep the low rate on capital gains, so that businesses like yours can expand and create jobs instead of just sending more of your earnings to the government. And so parents can spend and save more for their own children, I will propose to double the size of the child tax exemption. I will also propose as well a middle-class tax cut – a phase-out of the Alternative Minimum Tax to save more than 25 million middle-class families as much as 2,000 dollars in a single year.”

THE FACTS: MCCAIN'S TAX PLAN IS REGRESSIVE

John McCain’s Expensing Proposal Creates More Corporate Tax Havens: According to the Center for American Progress, “…McCain would create a potent new form of tax shelter through his pro¬posal to provide for immediate expens¬ing of investments in equipment and technology. As Avi-Yonah explains in his forthcoming paper, because McCain’s plan does not end the deductibility of interest paid by corporations, his expens¬ing proposal will let corporations obtain negative tax rates—making investments that are not only tax-free, but that can also reduce taxes owed on other income. Corporations need only borrow to pur¬chase equipment or technology, deduct the interest payments on that loan, and then immediately expense the entire cost of the equipment or technology. This tax shelter will allow corporations, and individuals using the corporate tax form, to avoid hundreds of billions of dollars in taxes. This tax shelter would also erode the individual income tax base by giving individuals strong incen¬tives to organize their affairs through corporations.” <(PDF)Center for American Progress Action Fund, March 2008>

McCain’s Tax Plan is More Regressive than the Bush Tax Cuts; Nearly 60 Percent of the Benefits Go to the Top One Percent: As a study from the Center for American Progress Action Fund recently noted, “The McCain plan to cut corporate taxes and eliminate the AMT is very regressive as well as very expensive. The plan delivers the vast majority of its benefits to high-income taxpayers and very little to tens of millions of middle-class families. … The McCain tax cuts together are even more regressive than the Bush tax cuts. … The bottom 60 percent of tax payers get only 4 percent of the benefit, while the bottom 80 percent get only 9 percent.” The study also noted that the top 1 percent of income earners will receive 58 percent of the benefits of the McCain tax plan. By contrast, 31 percent of the Bush tax cuts went to top 1 percent of income earners. <(PDF)Center for American Progress Action Fund>

MCCAIN RHETORIC: “Another of my disagreements with Senator Obama concerns the estate tax, which he proposes to increase to a top rate of 55 percent. The estate tax is one of the most unfair tax laws on the books, and the first step to reform is to keep it predictable and keep it low. After a lifetime building up a business, and paying taxes on every dollar that business earns, that asset should not be subjected to a confiscatory tax.”

THE FACTS: OBAMA HAS A RESPONSIBLE PLAN FOR THE ESTATE TAX; MCCAIN HAS FLIP FLOPPED ON THE ESTATE TAX

Barack Obama Will Create a $7 Million Estate Tax Exemption for Couples and a 45 Percent Rate: According to Bloomberg News, “Both candidates

2006: McCain Voted to Move Forward with Legislation to Permanently Repeal The Estate Tax. McCain voted with all but one of his Republican colleagues for cloture on the Death Tax Repeal Permanency Act, which failed in the Senate, 57-41.

2006: Mccain: “I Remain Opposed To Full Repeal Of The Estate Tax.” In a speech on the Senate floor, McCain stated that he opposed the full repeal of the estate tax: “In his 1906 State of the Union Address, President Theodore Roosevelt proposed the creation of a Federal inheritance tax. Roosevelt explained: "The man of great wealth owes a peculiar obligation to the State because he derives special advantages from the mere existence of government." Additionally, in a 1907 speech he said: "Most great civilized countries have an income tax and an inheritance tax. In my judgement both should be part of our system of federal taxation." He noted, however, that such taxation should "be aimed merely at the inheritance or transmission in their entirety of those fortunes swollen beyond all healthy limits." I agree with President Roosevelt, and I remain opposed to full repeal of the estate tax.”

2006: McCain Said Repealing Estate Tax Would Expand Deficit Too Much. McCain and other moderate Senators "argued that, given domestic spending demands and need to fund military operations in Iraq, the repeal sought by Frist and President Bush would expand the deficit by too much."

2003: McCain Voted Against Accelerating The Repeal Of The Estate Tax. In 2003, McCain voted against Senator Kyl's amendment to S.Con.Res. 23 that would have accelerated the repeal of the estate tax from 2010 to 2009. McCain was one of four Republicans to vote against the amendment, which passed 51-48.

2002: McCain Voted Against A Permanent Repeal Of The Estate Tax. In 2002, McCain was one of two Republicans to vote against a permanent extension of the estate tax repeal. The motion failed, with a vote of 54-44.

2001: McCain Voted Against Phasing Out The Estate Tax. In 2001, McCain was one of two Republicans to vote against the tax cut package that included an elimination of the estate tax over 10 years. The bill passed, 58-33.

MCCAIN RHETORIC: “It is not enough, however, to make little fixes here and there in the tax code – especially if you’re a small business owner filing under the individual tax. What we need is a simpler, a flatter, and a fair tax code. As president, I will propose an alternative tax system. When this reform is enacted, all who wish to file under the current system could still do so. And everyone else could choose a vastly less complicated system with two tax rates and a generous standard deduction.”

THE FACTS: MCCAIN HAS NOT SAID HOW HE WOULD PAY FOR THIS PLAN

McCain Has Not Outlined the Details or the Cost of this Proposal: John McCain has still not provided the details of this proposal nor how he would pay for it so it would either provide no meaningful relief to working families or add to the $5.7 trillion debt John McCain has already proposed to put our country in. http://www.johnmccain.com/Informing/Issues/4dbd2cc7-890e-47f1-882f-b8fc4cfecc78.htm “The Budget According to McCain: Part I,” FactCheck.org, 5/13/08; NY Times, 4/27/08>

MCCAIN RHETORIC: “As for health care policy, I believe that the best way to help small businesses and employers afford health care is not to increase government control of health care but to bring the rising cost of care under control and give people the option of having personal, portable health insurance...As it is, the traditional tax-subsidy that supports private insurance is concentrated on a subset of American workers and a portion of our businesses. My health care reform will end that unfair bias in the law, while helping to make health insurance more affordable for every American. We’re going to offer every individual and family in America a large tax credit to buy their health care, so that their health insurance is theirs to keep even when they move or change jobs. My plan would allow those who want to stick with employer provided health insurance to do so. But I want to give individuals greater choice, rather than give small business no choice at all.”

THE FACTS: MCCAIN’S HEALTH CARE PLAN WOULD BURDEN SMALL BUSINESS AND MAKE IT HARDER FOR AMERICANS TO GET HEALTH INSURANCE

McCain’s Plan Will Create More Instability for Small Business Premium Costs: According to the Center for American Progress, “To help small businesses, the majority of states take steps to cap premium rates within a certain range (technically called a “rate band”), and many states will also cap the annual increase in premiums… The McCain plan could very well create a rush to the bottom among insurers in these rules. McCain’s idea to allow insurance companies to sell policies over state lines will weaken small business protections by enabling businesses to simply market insurance policies around the country from states with weak protections. There would be no reason for an insurance company to sell a policy anywhere other than from states with weak insurance rules… But one reason these state rules exist is to prevent wild swings in price. McCain will offer much less predictability for small businesses on insurance costs, which will weaken small businesses.” <“Small Business is in Trouble Under McCain Plan”, The Wonk Room, 4/25/08>

McCain’s Plan Could Increase Costs for Many Americans and Make it Harder for Many Individuals to Obtain Insurance: According to Len Burman of the nonpartisan Tax Policy Center, “Removing or reducing employers’ incentives to sponsor health insurance would have mixed effects on coverage. While some young, healthy people might be induced to acquire coverage in the individual nongroup market under a different set of incentives, the loss of ESI could be particularly devastating to old and unhealthy workers who would face prohibitively high health insurance premiums in the private nongroup market in the vast majority of states.” And according to the Des Moines Register, “The proposal should scare the heck out of the millions of Americans who rely on employer-based coverage. Iowans who have tried to buy affordable coverage on their own know they need more than a tax credit and good health. Sometimes they need a winning lottery ticket…” The McCain plan “forc millions of Americans to shop for their own coverage in a profit-driven, private-insurance sector.”

Small Business Owners Opposes McCain Plan to Eliminate the Employer Tax Exclusion: According to NFIB, “NFIB members do NOT want the current tax exclusion eliminated nor capped, but think the tax position of those purchasing health insurance on the individual market should receive equivalent tax benefits to those in employer-based plans.”

McCain’s Health Care Plan Falls Short; Tax Credit is Less Than Half of the Cost of an Average Family Health Care Plan. As the Wall Street Journal noted, under the McCain health care plan “the existing tax break for employer-sponsored insurance would be eliminated, taking a step away from the work-based model in place for the last half century and toward an individual market.” Instead, he would provide tax credits – $2,500 per individual and $5,000 per family – to allow workers to purchase health insurance in the open market. However, these tax credits are far less than what an average health care plan currently costs. According to the Kaiser Family Foundation, the average annual cost for heath care insurance coverage in 2007 was $4,479 for single coverage and $12,106 for family coverage. <“Employer Health Benefits 2007 Annual Survey,” Kaiser Family Foundation, 9/11/07; “‘Call To Action’ On Health Care Reform,” John McCain 2008 press release, 4/29/08; Wall Street Journal, 10/11/07>

MCCAIN RHETORIC: “In so many ways, we need to make a clean break from the worst excesses of both political parties. And for Republicans, it starts with reclaiming our good name as the party of spending restraint. Somewhere along the way, too many Republicans in Congress became indistinguishable from the big-spending Democrats they used to oppose. The only power of government that could stop them was the power of veto, and it was rarely used. If that authority is entrusted to me, I will use the veto as needed. I will veto every bill with earmarks. I will seek a constitutionally valid line-item veto to end pork-barrel spending once and for all. And I will lead broad reforms that remove the many corporate tax loopholes that are costly, unfair to smaller business competitors, and inconsistent with a free-market economy.”

THE FACTS: MCCAIN’S EARMARK PLAN IS “LARGELY FANTASY.”

Center for American Progress Action Fund: At Most, Eliminating All Earmarks Will Yield $18.3 Billion in Annual Savings. According to the Center for American Progress, “The Office of Management and Budget analysis found earmarks totaling $16.9 billion, and the Taxpayers for Commonsense analysis found $18.3 billion. Both show that earmarks account for only about 0.6 percent of government spending. More importantly, neither earmark tally would put a dent in the massive spending cuts required to offset McCain’s tax proposals… In order to get a bigger number, McCain and his staff turned to a three-year-old analysis by the Congressional Research Service…”

Washington Post Fact Checker: McCain Proposal to Eliminate S100 Billion a Year in Earmarks is “Largely Fantasy.” “John McCain boasts that he can save $100 billion a year ‘immediately’ by eliminating the so-called earmarks that legislators attach to spending bills to finance pet projects, usually in their home state. But he has refused to say exactly which projects he would cut, and his estimates of the amount of money that is being spent on earmarks have been challenged by independent experts. … … McCain's talk about eliminating $100 billion a year in earmarks is largely fantasy. His advisers are now promoting a more realistic plan of eliminating $100 billion in overall spending. But it is difficult to take even that promise very seriously given the fact that the senator refuses to identify exactly which projects he will be cut. To use a phrase coined by George H.W. Bush, this is ‘voodoo economics,’ based more on wishful thinking than on hard data or carefully considered policy proposals.”

Wall Street Journal: McCain’s Plans To Eliminate Earmarks Will Not Pay For Lost Revenue From His Tax Cuts. “When asked Wednesday, after a town-hall meeting in Exeter, N.H., how he would balance his proposed budget, Sen. McCain responded, ‘By eliminating wasteful and pork-barrel spending, to start with.’ How much would that get him? In fiscal 2008, there were 11,737 appropriation earmarks totaling $16.8 billion. That is down from a peak in 2005, when there were nearly 13,500 earmarks totaling almost $19 billion. Eliminating earmarks wouldn't restore revenue lost by Sen. McCain's other propositions, including a litany of tax cuts. He plans to not raise taxes, but he also plans to increase the size of the military and institute health-care overhauls.”

[roseBudd]

1. someone needs to send this to the PUMAs they are trumpeting actual McCain vs Obama tax tables