PrintJune 10, 2008
How the Media misrepresents the Candidates' Tax Plans
When President Bush signed the 2001 tax cuts into law, the new lower rates had a ten year life, and are set to expire in 2010. John McCain has supported extending the tax cuts and making the current tax rates permanent. This means that for individual tax payers, McCain wants their tax rates to remain the same as they are now.
One might argue that in the current economic environment, not raising tax rates is a good idea. There are no new tax reductions of course, when you merely maintain the current rates. But the way things are scored in Washington DC, keeping rates the same is treated as a tax cut, and hence scored as a big revenue loss for the government, since the current rates are supposed to expire in two years, and go back to the levels where they were prior to the Bush tax cuts in 2001.
Barack Obama supports ending the Bush tax cuts -- in other words he wants individuals' tax rates to go up. However, the way this is scored in Washington , Obama's plan to let the Bush tax cuts expire, is "revenue neutral". So if rates go up, that is not treated as a tax increase. If rates stay the same, that will be reported as a tax cut for federal revenue purposes.
Even avoiding the argument as to whether lower rates draws in proportionately more tax revenue (the total federal tax share of GDP is about the same today as it has been historically, even with lower rates, and is headed up with or without the extension of the Bush tax cuts), the media will misrepresent the plans of the two candidates -- so one (McCain) will be seen as creating bigger deficits, and the other (Obama) as more fiscally responsible.
In reality, Obama wants higher individual tax rates, McCain wants them to stay the same. Obama also supports much higher tax rates on dividends, and capital gains, and to raise the ceiling on the level of income taxed for social security- in total, a massive federal tax grab, designed to support major new entitlement and programmatic spending. The federal government with Obama gets much larger, individuals' after tax income, and share of the economy, gets smaller. That is what you need to know.
