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<a class="moz-txt-link-freetext" href="http://www.truthout.org/article/obama-mccain-and-truth-about-taxes">http://www.truthout.org/article/obama-mccain-and-truth-about-taxes</a><br>
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<h3><a set="yes" linkindex="21"
href="http://www.truthout.org/article/obama-mccain-and-truth-about-taxes">Obama,
McCain and the Truth About Taxes</a></h3>
<p class="article_date">Tuesday 16 September 2008</p>
<p class="article_source">by: Maya Schenwar, t r u t h o u t | Report</p>
<p class="alignright"><img src="cid:part1.04070908.07010005@mailbag.com"
alt="photo"><br>
<span class="photo_source"> (Illustration: The New Yorker)</span> </p>
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<p> Unless you make more than $2.87 million per year, Barack Obama
will not raise your taxes. In fact, he will probably cut them.
</p>
<p> This reality has been trampled, twisted, turned inside out and
scribbled over so many times by the McCain campaign that it is hardly
recognizable amid the clutter, but the fact remains: Obama's plan would
grant tax cuts to all Americans making less than $226,982 per year,
with the largest cuts going to the poorest individuals. Only the
wealthiest 0.1 percent of earners would have to pay more.</p>
<p> McCain's plan, in contrast, would decrease taxes for all, but
the largest decreases would go to the highest-earning bracket of
taxpayers, as well as to corporations. The lowest-income Americans
would benefit the least from McCain's tax cuts, with only a 0.2 percent
decrease. They'd get a 5.5 percent tax cut under Obama's plan.</p>
<p> Since most Americans do not make more than $226,982, most
Americans would receive a larger tax cut if Obama became president,
according to a recent study by the nonpartisan Tax Policy Center that
compared the two proposals.</p>
<p> Additionally, under Obama's plan, low-earning seniors would pay
no income tax at all.</p>
<p> <b>McCain-onomics</b></p>
<p> Despite McCain's self-promoted image as a "maverick" and
innovator, his tax policy appears to be driven by the same motivations
as his GOP forebears, according to Jonah Gelbach, a University of
Arizona economics professor who has written extensively on the
presidential campaign.</p>
<center><img src="cid:part2.00020207.08020104@mailbag.com"><br>
(Graphic: The Washington Post)
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<p> "McCain has signed on to the Republican Party's generation-long
view that the rich just aren't rich enough," Gelbach told Truthout.</p>
<p> The McCain campaign holds that padding wealthy (and corporate)
pocketbooks is the best type of economic stimulus. Under this logic,
tax cuts for the highest earners encourage those individuals to give
more back to the economy - starting new enterprises, expanding their
businesses and spending more cash.</p>
<p> "Entrepreneurs are at the heart of American innovation, growth
and prosperity," the campaign's platform states. "Entrepreneurs create
the ultimate job security - a new, better opportunity if your current
job goes away. Entrepreneurs should not be taxed into submission."</p>
<p> Yet Gelbach points to the fact that tax rates are lower now than
they were during the Clinton era, a period which, despite the warnings
of conservative doomsayers, proved prosperous.</p>
<p> Moreover, small-town, working-class "values voters" - key
Republican targets - would gain little from McCain's plan, according to
Gelbach. Hefty tax cuts for the rich would eventually need to be
balanced out, either by increasing taxes for lower-income brackets or
by slashing spending. Given the McCain campaign's commitment to a large
military presence abroad, funding cuts would likely affect the domestic
programs that provide assistance to working-class Americans.</p>
<p> Stanford professor Myron Scholes, the 1997 Nobel Prize winner in
economics, lauds McCain's emphasis on slashing taxes. Speaking to
reporters at a late August conference, he called Obama's plan a "policy
of redistribution." However, he noted, a McCain presidency would likely
see an uphill battle on taxes.</p>
<p> "All things being equal, we'll probably have a Democratic
Congress," Scholes said. "So McCain can say he wants to produce lots of
different tax cuts, but it'll be hard to get that through."</p>
<p> <b>Obama's Fairness Doctrine</b></p>
<p> Like McCain's, Obama's economic plan claims the "tax relief"
mantra. However, instead of adhering to trickle-down logic, it focuses
on the middle class.</p>
<p> "Obama will restore fairness to the tax code and provide 150
million workers the tax relief they need," his platform states. After
tax credits, 10 million Americans would pay no income tax at all.</p>
<p> "Restoring fairness" means substantially cutting taxes for lower
earners and raising them for the super-wealthy. But it also means a
whole range of programs to even up access to health care, education and
housing. Obama's proposal would reduce insurance costs across the board
and offer tax credits to employees who buy insurance. It would also add
a $4,000 tax credit for families to send their kids to college.</p>
<p> The conservative Heritage Foundation released a memo in June
linking the Obama plan to "European levels of taxation," calling it a
"return to the bad old days" of the Carter administration and accusing
it of "raising taxes on the successful." The question for voters then
becomes a personal and philosophical one: to what extent should the
wealthy be asked to give back to their country and community?</p>
<p> The 95 percent of working families that would receive a tax cut
under an Obama administration might come up with a different answer
than the Heritage Foundation.</p>
<p> <b>War and Taxes</b></p>
<p> One factor that the McCain campaign doesn't emphasize is exactly
where the tax dollars that <i>are</i> collected will be going. Though
McCain's plan drastically reduces taxes, it doesn't reduce the amount
of money allotted to one of the most expensive government endeavors:
the Iraq war.</p>
<p> The Obama campaign's Brian Deese recently told the Chicago
Sun-Times that comparisons of the two candidates' economic plans don't
"count the impact of current Iraq war spending," adding that "if
McCain's plan drives the deficit up and puts upward pressure on
interest rates, that increases costs for families and could force
really Draconian, across-the-board spending cuts."</p>
<p> By straightforward logic, a substantial withdrawal of troops
from Iraq, as proposed by Obama, would ease the burden that status-quo
military policies have placed on taxpayers, according to Gelbach.</p>
<p> "Getting out of Iraq faster will certainly reduce the present
value of federal tax dollars necessary to raise, unless you think that
getting out will make things worse and force us back in an even more
expensive capacity," Gelbach said. "McCain has at various times made
arguments to this effect, but his record on Iraq judgment has not
exactly been stellar.... McCain's campaign has tried to claim they can
count on military savings from leaving Iraq, even as he has both
endorsed in principle a 100-year US presence and refused to sign on to
the timeline that the Maliki government is now working out with the
Bush administration. He has repeatedly said we will leave only with
victory, yet he has refused to define 'victory.'" Thus, it is hard for
an objective observer to determine exactly when or under what
conditions McCain would actually leave Iraq. And the cost of our
presence in Iraq - whether in full-on combat role or otherwise - would
ultimately have to be paid with actual tax dollars."</p>
<p> According to the recent Tax Policy Center study, both
candidates' plans would increase the national debt. However, Obama wins
here on the fiscal conservation front: McCain's proposal would cost the
Treasury $3.7 trillion, while Obama's would cash in at $2.7 trillion.</p>
<p> The power of the purse ultimately rests with Congress, and
neither candidate would be able to singlehandedly change the course of
economic policy upon taking office. Still, when it comes to taxes,
Obama and McCain would guide the country in sharply different
directions.</p>
<p> Looking past the McCain campaign's misleading rhetoric and
convoluted logic, the problem boils down to this: Who should be first
in line for tax relief: the rich or the poor? It's no secret where each
candidate's priorities lie.</p>
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<p class="alignleft"><a set="yes" linkindex="22"
href="http://www.truthout.org/articles/by-author/34002"
class="more_author">»</a></p>
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<p><a href="mailto:maya@truthout.org">Maya Schenwar</a> is an editor
and reporter for Truthout.</p>
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