. . . which is not some derivative of Heritage, or Cato, or Grover Norquist, but a combination of those two obviously neo-con outfits, the Urban Institute and the Brookings Institution.
Disclaimer: do not read this as an endorsement of Senator John McCain's position; McCain's tax plan actually comes off worse by comparison in the opinion of the Tax Policy Center.
So what's really, really, really scary is that this is apparently the best the Demopublicans have to offer.
Second Disclaimer: Senator Obama claims that his tax plan would be far more progressive than Senator McCain's, in that the largest tax cuts would go to low-income taxpayers and the largest tax increases would be visited on the wealthiest Americans. However, as these excerpts show, the situation is much more complex than that.
So what does the Tax Policy Center say about Senator Obama's plan?
Here are the excerpts [but please go read the whole thing yourself]:
Here are the key points about Senator Obama's tax plan
1. He is telling the truth that he would change the income tax distribution to favor lower-income households, but measured against realistic assumptions as the next-to-last quotation shows, the tax cut for middle-income households will only be about $969, while the increase for the top 1% would be $133,715...
2. Even if you view those changes as desirable (and I have readers who do), they come at the cost of reducing tax revenues over the next decade by 3.3 TRILLION dollars. That means that even measured against a current-services baseline, Senator Obama intends to increase the national debt by 50%.
3. But, of course, Senator Obama has no intention of maintaining current services at their baseline level. He intends to make massive investments in a larger defense budget, energy, social services, and health care. Given that the Tax Policy Center already includes all the offsets Senator Obama claims from cracking down on corporate welfare, that means that this is all new spending that will either have to be paid for via more deficit spending or subsequent tax increases he's not currently discussing.
4. The report hammers away at the fact that, like Ronald Reagan, Senator Obama has made unrealistically optimistic assumptions about economic growth, which really mean that the debt will almost certainly expand by more than $3.3 Trillion, especially once the new programs are phased in.
5. Despite his claims to revising the tax code for purposes of fairness, Senator Obama's changes will hurt married couples at all tax levels, and he is obviously pandering to retiring Boomers by offering them tax breaks that no one else with their income level gets.
Change we can believe in?
What Senator Obama--like Senator McCain, ironically--is offering is a proposal to cut taxes while increasing spending.
Wait a minute, wasn't that what Dubya offered us?
And you can see how well that all worked out.
The worst part is: if you are committed to voting for a Democrat or a Republican, I can't honestly tell you to prefer one over the other based on their tax plans, because both of them will lead us to increased government spending and larger deficits.
So if you're going to vote for a Demopublican based purely on taxes, I guess the best thing to do is to vote for the one who actually panders more to you. [For myself, I'm screwed: married, and in a tax bracket Obama would consider high enough for a tax increase and McCain would consider too low for a tax cut. Nobody's pandering to me, damnit.]
And that's a hell of a comment on our choices this year.
[Personal note: kavips, this is also why a one-on-one interview with Senator Obama wouldn't budge me. Either he knows this and he's being disingenuous, or he doesn't realize it--which is worse.]
Disclaimer: do not read this as an endorsement of Senator John McCain's position; McCain's tax plan actually comes off worse by comparison in the opinion of the Tax Policy Center.
So what's really, really, really scary is that this is apparently the best the Demopublicans have to offer.
Second Disclaimer: Senator Obama claims that his tax plan would be far more progressive than Senator McCain's, in that the largest tax cuts would go to low-income taxpayers and the largest tax increases would be visited on the wealthiest Americans. However, as these excerpts show, the situation is much more complex than that.
So what does the Tax Policy Center say about Senator Obama's plan?
Here are the excerpts [but please go read the whole thing yourself]:
As noted, both candidates may be overoptimistic in their revenue targets for closing tax loopholes—Obama probably more than McCain....
Senator Obama’s proposed new tax credits could encourage desirable behavior, particularly if the childless EITC and payroll tax rebate encourage additional labor supply among childless low-income individuals. However, he would also direct new subsidies at an already favored group—seniors —and an already favored activity—borrowing for housing— which could probably be better directed elsewhere. ...
Senator Obama would exempt seniors earning less than $50,000 from income taxation....
Senator Obama has also proposed substantial tax cuts and would significantly reduce federal tax revenues. ...
Many provisions in Obama’s plan share a common shortcoming in their use of phaseouts to limit their benefits and constrain revenue costs. Phaseouts gradually reduce tax benefits over a range of income and thus increase the effective marginal tax rate on taxpayers in that range. To the extent that higher tax rates affect behavior—inducing people to work fewer hours or save and invest less—the phaseouts adversely affect economic activity and growth. Furthermore, phaseouts add significant complexity to the tax code, making it more difficult for taxpayers to determine how much they owe and harder to understand how the tax system works. ...
The Making Work Pay credit is intended to offset some of the regressivity of the Social Security payroll tax and encourage low-income people to work, but it does so at a substantial revenue cost—$728 billion over 10 years. Because most workers earn more than $8,100 annually, most of the revenue loss would go to taxpayers who receive no incentive to work more. A credit that was targeted more toward low-income workers would provide a more cost-effective work incentive. And because the phaseout of the credit increases marginal tax rates for those workers in the phaseout range, it might actually give those workers an incentive to work less. On efficiency grounds, the money would probably be better spent reducing marginal tax rates overall or reducing the deficit....
The proposal to exempt seniors earning under $50,000 from income tax is poorly designed according to its current description and creates inequity between older and younger taxpayers with the same income.... The proposal also raises concerns about fairness. Under current law, most senior citizens pay no income tax because only a portion of Social Security benefits are subject to tax, and only for taxpayers with incomes above a threshold. In addition, senior citizens may claim an additional standard deduction. Nobody age 65 and over whose income comes entirely or almost entirely from Social Security is subject to income tax. The proposal would actually exempt comparatively well off, though not affluent, senior citizens from tax and give them a benefit not generally available to working Americans. Given the large pending increases in public spending on senior citizens due to the forthcoming retirement of the baby boomers, it seems inappropriate to target special income tax breaks to this group. Furthermore, the proposal helps only those low-income seniors who currently pay income taxes; those most in need—would get no benefit....
Senator Obama’s plan would substantially increase the deficit compared with current law and would add nearly $3.3 trillion to the national debt over ten years. Top marginal income tax rates would increase to their pre-2001 levels, but top capital gains tax rates would be higher and dividend tax rates lower....
Overall, the economic effect of the Obama proposals will depend on how the resulting deficits are closed. If the deficits result in higher tax rates in the future, the economy will be harmed. If they are closed by spending cuts, the economic costs will be lower, but the long-term gain in progressivity may also be diminished depending on which programs are cut....
Under either Senator Obama’s or Senator McCain’s plan, however, the debt would likely continue to rise as it has over the past eight years, even under the CBO’s relatively optimistic assumptions about spending. Senator Obama’s plan would add $3.3 trillion to the national debt (including additional interest costs) while Senator McCain’s plan would add $4.3 trillion. This does not include the cost of expanding health insurance coverage and assumes that Senator McCain’s proposals phase in and phase out on schedule. It also assumes that all of the candidates’ optimistic revenue offsets materialize. If any of these assumptions turned out to be unwarranted, the national debt would grow even more.
Another way to look at the candidates’ proposals is how much revenues would be as a share of GDP. Under Senator Obama’s plan, revenues would total 18.2 percent of GDP in 2013—at the end of a hypothetical first term. This is about the average revenue collected by the federal government since World War II. Under Senator McCain’s plan, the revenue yield would be
about 17.8 percent. Given that demands on the federal government are likely to exceed historical levels in 2013 (CBO projects spending at 19.5 percent of GDP, even assuming a wind-down of war-related expenses), these estimates imply that substantial cuts in spending would be required to balance the budget if all of the proposed tax cuts were enacted....
Measuring Obama’s plan against an alternative baseline in which the 2001–06 tax cuts are made permanent and the 2007 AMT patch is extended and indexed for inflation markedly alters its assessed effects. Those at the top of the income scale would face much larger tax increases and taxpayers lower in the income distribution would gain less (table 3). Measured against this alternative baseline, middle-income households would receive an average tax cut of 2.0 percent of income or $969. Those in the top fifth of the income distribution would face an average tax increase of 3.4 percent of income, or $7,748. The top 1 percent would be hit by an average tax hike of more than 9 percent of income or $133,715....
As a percent of after-tax income, married couples filing jointly would fare the worst, facing a tax increase of 0.1 percent of income....
Here are the key points about Senator Obama's tax plan
1. He is telling the truth that he would change the income tax distribution to favor lower-income households, but measured against realistic assumptions as the next-to-last quotation shows, the tax cut for middle-income households will only be about $969, while the increase for the top 1% would be $133,715...
2. Even if you view those changes as desirable (and I have readers who do), they come at the cost of reducing tax revenues over the next decade by 3.3 TRILLION dollars. That means that even measured against a current-services baseline, Senator Obama intends to increase the national debt by 50%.
3. But, of course, Senator Obama has no intention of maintaining current services at their baseline level. He intends to make massive investments in a larger defense budget, energy, social services, and health care. Given that the Tax Policy Center already includes all the offsets Senator Obama claims from cracking down on corporate welfare, that means that this is all new spending that will either have to be paid for via more deficit spending or subsequent tax increases he's not currently discussing.
4. The report hammers away at the fact that, like Ronald Reagan, Senator Obama has made unrealistically optimistic assumptions about economic growth, which really mean that the debt will almost certainly expand by more than $3.3 Trillion, especially once the new programs are phased in.
5. Despite his claims to revising the tax code for purposes of fairness, Senator Obama's changes will hurt married couples at all tax levels, and he is obviously pandering to retiring Boomers by offering them tax breaks that no one else with their income level gets.
Change we can believe in?
What Senator Obama--like Senator McCain, ironically--is offering is a proposal to cut taxes while increasing spending.
Wait a minute, wasn't that what Dubya offered us?
And you can see how well that all worked out.
The worst part is: if you are committed to voting for a Democrat or a Republican, I can't honestly tell you to prefer one over the other based on their tax plans, because both of them will lead us to increased government spending and larger deficits.
So if you're going to vote for a Demopublican based purely on taxes, I guess the best thing to do is to vote for the one who actually panders more to you. [For myself, I'm screwed: married, and in a tax bracket Obama would consider high enough for a tax increase and McCain would consider too low for a tax cut. Nobody's pandering to me, damnit.]
And that's a hell of a comment on our choices this year.
[Personal note: kavips, this is also why a one-on-one interview with Senator Obama wouldn't budge me. Either he knows this and he's being disingenuous, or he doesn't realize it--which is worse.]
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