McCain Memo: Sen. Obama's Tax Policies And The Tax Policy Center Report

Please see memo from McCain campaign senior policy advisor Doug Holtz-Eakin on Sen. Obama’s tax plan and the Tax Policy Center report…


This week, Barack Obama has claimed that his tax plan will help middle class families in America. His events come on the heels of a Tax Policy Center (TPC) which offers an incomplete analysis of each candidate's plans:

TPC Finds There Is Only On Tax-Cutter In The Race: John McCain. The study hides the most important truth in the footnote. Compared to what is being done right now by the Democratic-controlled Congress -- namely existing tax law with an annual "patch" on the AMT – the TPC calculates that John McCain lowers taxes by $250 billion over the next ten years and Barack Obama raises taxes by over $700 billion.

TPC Ignores The Impact Of Each Tax Plan On Economic Growth. Barack Obama's plans for higher taxes and mandates will burden small businesses and drive American jobs overseas. Obama himself admitted that he would have to "defer" the damage of his tax increases if the economy is weak. Why damage it at all? Slower economic growth will lead to a decrease in tax revenue and thus a larger budget hole under Obama's plan. By lowering taxes as John McCain proposes, we can get our economy back on track and help businesses create jobs here in the United States.

TPC Does Not Account For Barack Obama's Spending Proposals. According to the National Taxpayers Union, Barack Obama's spending plans amount to $1.147 trillion in new spending over the next four years. The report does not account for this or the burden of higher payroll taxes. How can he "pay for every proposal" and still claim to lower taxes for 95% of Americans? By using Congressional Budget Office (CBO) spending projections to estimate their debt projections, the Tax Policy Center report ignores the spending control initiatives that John McCain has proposed that would certainly lead to a balanced budget.

TPC Fails To Include Barack Obama's Proposal To Lift The Earnings Cap On The Social Security Payroll Tax. This proposal alone will further burden small businesses, slow economic growth and impact tax revenues/budget projections.

TPC Does Not Include John McCain's Health Insurance Tax Credit. John McCain would replace our arbitrary, regressive, wasteful system of tax subsidies for private health insurance with a $2,500 refundable tax credit for everybody ($5,000 for couples). Barack Obama would build big new government programs and bureaucracies. By excluding these proposals, the study misses John McCain's help to lower and middle-income Americans and understates the burden of Barack Obama's proposals.

TPC Analysis And Barack Obama Are Driven By Unreal Assumptions. The Center claims that if you raise taxes on a small business owner, they simply pay the tax and that is the end of it. However, in the real world, the small business owner cuts back hiring and health insurance benefits. Workers really "pay" that tax. Also, the Center claims if you cut the corporate tax, every penny of the benefit goes to the wealthy. In the real world, when the tax rate is lower, corporations don't move factories abroad, workers don't get laid off, and health and retirement benefits don't disappear.

TPC Found That Barack Obama's Plan Adds More "Complexity" To The Tax Code. This will further burden small business owners as they try to comply with an even more complicated tax system under Barack Obama.

At The Most Basic Level, The Obama Campaign Is Now Confronting The Hypocrisy Of Their Tax Policy. Barack Obama has voted 94 times for higher taxes, including supporting the Democratic budget this year that taxed people earning under $40,000. How can Barack Obama claim to support the middle class, and then actually vote to tax them at higher rates? Even the Tax Policy Center found that Barack Obama's plan would lead to a tax increase on 10 million senior households. Further, Obama's top economic adviser has himself called for a cut in the corporate tax, a centerpiece of John McCain's plan to lower taxes, grow our economy and create jobs here in the United States.