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Today's Loot

Jason Furman on the Tax Policy Center's Analysis of McCain

Jason writes, from BOfPWHQ:

To: Interested parties
Fr: Jason Furman, Economic Policy Director, Obama Campaign
Re: John McCain’s tax plan is $2.8 trillion more expensive than his advisors previously admitted
Dt: July 23, 2008

In recent months, Senator McCain and his campaign staff have offered several different, and often conflicting, descriptions of the McCain tax plan. As the New York Times concluded, “Mr. McCain is having it both ways. On the campaign trail, he has sounded like a bold tax cutter. To budget wonks, though, his campaign has gingerly inched away from those plans, saying details will be forthcoming. In the meantime, the most-cited analysis of his proposed budget doesn’t square with what he is saying on the stump.”

To take just one example, on the McCain website, it states that “John McCain will permanently repeal the AMT” and the McCain campaign touts this as a $2,700 tax cut for 25 million families. Yet in July when the Tax Policy Center undertook an analysis that threatened to show the true fiscal cost and the full extent of the regressivity of Senator McCain’s tax plans, his aides apparently told the Tax Policy Center that this was not his plan and their analysis accordingly stated “Senator McCain does not plan to repeal the individual AMT.” According to the McCain campaign’s own estimates, the difference between these two positions is $60 billion per year.

Today, the Tax Policy Center released a new analysis of the McCain and Obama tax plans, which provides a comparison between what each of the candidates says on taxes (their actual plans) and what their campaign advisors claim. It finds that the true cost of Senator McCain’s tax proposals is $2.8 trillion larger than what his advisors have acknowledged. And most of that $2.8 trillion is the cost of yet more tax cuts for corporations and the wealthy. The plan still offers very little for ordinary Americans.

While the Tax Policy Center analysis has some flaws, it confirms a number of important points about the candidates’ tax plans:

  1. John McCain’s actual tax policies are $2.8 trillion more expensive than his advisors previously admitted.
  2. Even the extra $2.8 trillion in tax cuts does not change the fact that, as the National Review editorialized, “the McCain plan… offers very little in the way of direct benefits to Americans in the middle of the income scale.” McCain’s true, expensive tax cut offers only half as much to the middle class as the Obama tax plan. (The original plan described by advisers offered one-third as much to the middle class as the Obama plan.)
  3. McCain’s true tax policies are even more stacked against typical families than his campaign previously admitted – giving a total of $1.8 trillion in tax cuts to corporations and more than a half-million dollars ($577,000) per year to the 0.1 percent of taxpayers who make more than $2.8 million per year. A different analysis shows that the oil companies would get $4 billion of these tax cuts, including $1.2 billion for Exxon-Mobil alone.
  4. IRS data shows that McCain’s only middle class tax cut provides $0 in direct relief to 101 million households. Ninety seven percent of seniors would get nothing from McCain’s middle class tax cut.
  5. Obama’s numbers add up – while McCain’s plan would add $3.4 trillion to the deficit over the next decade and would require cutting Social Security and Medicare by 56 percent to meet McCain’s goal of balancing the budget in 2013.