Now that Congress has approved the Bush-Paulson financial stabilization plan, Senator John McCain has an opportunity to refocus his Presidential campaign, and get back on the political offensive by pounding Senator Obama on the tax issue.
No domestic issue provides a starker contrast between Mr. McCain and Mr. Obama than the issue of taxes. McCain wants to keep taxes low for all taxpayers, and cut them where he can. Mr. Obama wants to redistribute the tax burden by raising tax rates on the economically successful, and providing tax relief to certain middle- and low-income earners.
Specifically, Senator McCain wants to permanently extend the 2001-2003 tax reductions, increase dependent tax exemptions, cut the U.S. corporate tax from 35 percent to 25 percent, allow businesses to expense their investments, and phase-out the Alternative Minimum Tax. Ultimately, Mr. McCain wants to simplify the tax code by allowing taxpayers to choose between the current system or a streamlined system with two income tax brackets and a generous standard deduction.
By contrast, Senator Obama has proposed a redistributionist tax plan, which would generally raise income and payroll taxes on the so-called “wealthy,” and use that extra tax revenue to provide a hodge-podge of tax breaks for middle- and lower-income taxpayers. Obama’s tax-raising agenda includes increasing the top tax rate to 39.6 percent, raising capital gains and dividend taxes somewhere between 20 percent and 28 percent, and imposing a 2 to 4 percent payroll tax surcharge on people earning $250,000 or more.
Further, Senator Obama’s voting record clearly demonstrates his bias toward higher taxes. During just three years in the U.S. Senate, Obama voted 94 times for higher taxes, and voted for a Congressional budget resolution which called for raising taxes on people earning as low as $42,000 annually.
Because of tightening credit, rising energy prices, and the continuing fall-out from the housing bubble, the U.S. economy is clearly slowing down, perhaps sliding into a recession. As a result, jobless claims are up, consumer spending has slowed from the second quarter to the beginning of the third quarter, and corporate after-tax profits and capital expenditures are anemic. Over the past ten months through September, the economy has lost 983,000 jobs while unemployment has increased from 5.0 to 6.1 percent.