Tuesday, September 30, 2008

Misleading Claims by McCain on Obama’s Tax Plans

By LARRY ROHTER

One of the sharpest exchanges Friday night in the presidential debate between Senators John McCain and Barack Obama came on the issue of taxes. When Mr. McCain charged that his opponent had “voted in the United States Senate to increase taxes on people who make as low as $42,000 a year,” Mr. Obama replied: “That’s not true, John. That’s not true.”

“That’s just a fact,” Mr. McCain responded. “Again, you can look it up.”

So what does the record say when you look it up? Is one candidate right and the other wrong, or are both exaggerating?

In the past, Mr. McCain has characterized Mr. Obama’s position on taxes in ways that proved to be demonstrably inaccurate. His remarks on Friday night, which he amplified on the campaign trail on Monday, seemed to be an effort to shift him away from that shaky ground. However, they too contain assertions that are misleading or overstated.

Mr. McCain’s campaign has made it clear that he intends to portray Mr. Obama as an advocate of tax increases in the home stretch of the presidential race. Appearing Sunday on “Meet the Press” on NBC, Mr. McCain’s senior strategist, Steve Schmidt, said Mr. Obama’s voting record on taxes was “different from what he says out on the campaign trail” and was “a recipe for disaster for the economy.”

The basis of Mr. McCain’s accusation is that Mr. Obama has voted twice this year for Democratic-supported resolutions on the budget for the 2009 fiscal year, which begins Wednesday. In those nonbinding resolutions, Mr. Obama and others, including two Republicans, voted to allow the tax cuts that President Bush pushed through Congress in 2001 and 2003 to expire at the end of 2010, as envisioned in the original legislation.

The budget resolutions are merely a blueprint and do not have the force of law. But even if they indicate a propensity by Mr. Obama to vote to raise taxes — something he and his campaign would fiercely dispute — there is a question of whether the vote would raise taxes at all.

“It strikes me as a bizarre proposition and a false premise to argue that you are voting for a tax increase by not voting to cut taxes,” said Bob Williams, senior research associate at the nonpartisan Tax Policy Center in Washington. “Not voting in favor of extending something into the future does not seem to me to be voting for a tax increase.”

Mr. Williams, formerly the assistant director of tax analysis at the Congressional Budget Office, attributed Mr. McCain’s claim to what he called “the silly season” of the presidential campaign. “They are both so anxious to find something to make the other guy look wrong,” he said.

Mr. Williams pointed out that Mr. Obama had “pushed the same kind of demagoguery as regards Social Security” by falsely accusing Mr. McCain of wanting to cut benefits in half.

The bottom line is that if passed into law without accompanying tax relief measures, the budget resolutions that Mr. Obama endorsed would raise taxes for some individuals making $42,000 a year. But it would not raise taxes for all of them. For a single taxpayer with no dependents, the amount of that increase would be $15. A single taxpayer with one child earning $58,000 or less, however, would not pay additional taxes.

In his presidential platform, Mr. Obama has also proposed several measures to mitigate the impact of letting the Bush tax cuts expire. Under his plan, only individuals making $200,000 or more and families earning more than $250,000 a year, accounting for less than 2 percent of the population, would pay additional taxes, and more than 90 percent of the population would receive a tax break of some sort.

“It is our position that if in 2011 the Bush tax cuts expire, we would define that as a tax increase,” said Mr. Obama’s chief economic adviser, Jason Furman. “The Obama plan is designed to prevent a tax increase that George Bush signed into law.”

In remarks on the campaign trail on Monday in Columbus, Ohio, Mr. McCain broadened his accusations, saying that Mr. Obama had “never voted to cut your taxes” and was “always cheering for higher taxes or against tax relief.”

Mr. McCain himself originally opposed the Bush tax cuts, saying they were a fiscally irresponsible gift to the wealthy “at the expense of middle-class Americans who need tax relief.” But he now favors extending them permanently.

Mr. McCain’s accusations on Friday and Monday are the latest iteration of a line of attack that his campaign has been employing for several months, after an earlier claim that Mr. Obama was proposing “the largest single tax increase since World War II” was debunked by economists and tax experts.

The McCain campaign originally maintained that Mr. Obama’s support of the nonbinding budget resolution meant he would raise taxes on those making as little as $32,500 a year. That failed to distinguish between total income and taxable income.

But even after adopting the $42,000 figure as his benchmark, Mr. McCain went on to misrepresent his opponent’s position. In a Spanish-language advertisement, for example, the McCain campaign has said that Mr. Obama favors raising taxes on “families” making $42,000 a year.

That figure is incorrect as well. In reality, a family of four with annual income of up to $90,000, to take one example, would not have been affected even in the unlikely event that the Democratic budget resolution were to be enacted with no accompanying tax relief for the middle class.

In an English-language Web advertisement issued in August, Mr. McCain also claimed that Mr. Obama favored “a tax increase for everyone earning more than $42,000 a year.” That statement is patently false. Under Mr. Obama’s tax proposal, those in the middle of the middle class — people earning $37,000 to $66,000 a year — would receive a tax cut of more than $1,000 a year, more than three times what Mr. McCain is proposing in his tax platform.

No comments: