The Taxman Cometh, and he’s conflicted a bit

Sen. McCain and Sen. Obama have taken to sniping back and forth over taxes and it doesn’t appear this debate will end anytime soon. Sen. McCain dished out some tough criticism of Sen. Obama’s tax plan and economics policies while backing up his new friend, “Joe the Plumber.” Meanwhile, Sen. Obama has taken to hitting McCain alleging that his tax plan only supports the wealthy.

Report from USAToday:

In his acceptance speech at the 1984 Democratic convention, Walter Mondale promised to reduce the budget deficit by raising taxes. He later went on to lose every state but his home state of Minnesota and Washington, D.C.

It’s not surprising, then, that despite a ballooning budget deficit and a recently enacted $700 billion financial bailout, John McCain and Barack Obama have pledged to lower taxes for millions of Americans.

McCain wants to extend the Bush administration’s 2001 tax cuts, double the personal exemption taxpayers can claim, and lower corporate tax rates.

Obama wants to roll back some of the tax cuts for the wealthiest Americans and increase corporate tax rates, while reducing taxes for low- and middle-income families.

This week, both candidates proposed temporary tax cuts designed to help Americans cope with the financial crisis, which has sharply reduced the value of their retirement savings. McCain wants to cut the capital gains rate in half, reduce the tax on withdrawals from retirement savings to 10%, and waive a rule that requires seniors to start taking withdrawals from tax-deferred retirement savings at age 70½. Obama would permit savers to take penalty-free hardship withdrawals of up to $10,000 from their 401(k) plans and individual retirement accounts in 2008 and 2009. Both candidates have proposed suspending taxes on unemployment benefits.

But whoever takes office on Jan. 20 will confront a brutal fiscal reality. The Congressional Budget Office estimates that the nation’s debt will swell to $2.3 trillion by 2018. The non-partisan Tax Policy Center estimates that Obama’s tax package would add $3.5 trillion to the total, while McCain’s proposals would add $5 trillion.

Douglas Holtz-Eakin, McCain’s senior policy adviser, says McCain’s tax cuts would create more jobs. “The centerpiece of Sen. McCain’s approach to deficit reduction is to get the economy going,” he says.

Brian Deese, Obama’s deputy economic policy director, says Obama has “put together a package of pro-growth tax cuts aimed to help middle-class families who are struggling the most in the current economy.”

McCain has pledged to eliminate earmarks and wasteful spending, while Obama has targeted tax loopholes. But neither candidate has offered a realistic plan to pay for their tax proposals, says Leonard Burman, director of the Tax Policy Center.

In addition, reducing domestic spending is a lot harder than it sounds, says Clint Stretch, managing principal for tax policy for Deloitte Tax. “Things like aid to higher education, air-traffic controllers, roads, bridges, are not easily cut,” he says.

Burman says whoever wins the election will soon confront the “overwhelming realities” of the national debt. For now, though, “Both campaigns have made a political calculation that they want to talk about happy things.”

Video from CNN of McCain making some of these statements:

Meanwhile, McCain has played the “socialist card,” if there’s such a thing, as the way he described Obama’s plan, report from Yahoo News:

CHARLOTTE, N.C. – Republican presidential candidate John McCain on Saturday accused Democratic rival Barack Obama of favoring a socialistic economic approach by supporting tax cuts and tax credits McCain says would merely shuffle wealth rather than creating it.

“At least in Europe, the Socialist leaders who so admire my opponent are upfront about their objectives,” McCain said in a radio address. “They use real numbers and honest language. And we should demand equal candor from Sen. Obama. Raising taxes on some in order to give checks to others is not a tax cut; it’s just another government giveaway.”

McCain, though, has a health care plan girded with a similar philosophy. He proposes providing individuals with a $5,000 tax credit to buy health insurance. He would pay for his plan, in part, by considering as taxable income the money their employer spends on their health coverage.

McCain leveled his charge before a pair of appearances aimed at restoring his lead in critical battleground states. In both North Carolina and Virginia, where McCain was to speak later in the day, his campaign has surrendered its lead to Obama in various polls. President Bush, a Republican, won both states in 2004.

The state dips mimic larger national trends that have given Obama a lead over McCain following Wall Street chaos that focused the race on who is best equipped to restore the economy.

On Sunday, McCain was to travel to Ohio, where he might appear with “Joe the Plumber,” the Holland, Ohio, plumber Joe Wurzelbacher whom the senator has been portraying as emblematic of people with concerns about Obama’s tax plans.

Obama hasn’t answered too many of these charges directly, letting his TV ads do that work, and has set out on a a new course telling voters that McCain plans to cut Medicare coverage for seniors:

The allegations on both sides will continue flying right up to the end. Probably like 4 or 5 more “October surprises” as well.

  • Pats

    Yes we’ve heard this debate for a while now and it’s growing wings. Joe The Plumber has joined the debate to symbolise the middle class but one other contested issue has propped up again. The Iraqs are asking American soldiers out by end of December 2008 while American government is negotiating to extend their occupation in Iraq. What are the presidential candidates, who will inherit this issue, saying about that?

  • Jennifer

    I posted this in another comment section but it seems to apply more here. I have never heard this question being addressed…

    Can anyone explain the rationale behind the windfall profits tax that Obama supports when it’s pretty much agreed across the board that the US needs to reduce their dependence on foreign oil? So we ask for more production but then tax it more if production goes beyond a certain ‘acceptably profitable’ level??

  • The rationale of the windfall profit tax is the same rationale when Palin did a windfall profit tax in Alaska.

    Click —> McCain Fact Check

    Seems those pesky Conservative Republicans are just socialists….LOL

  • Bill Hedges

    Pats– America has a agreemen to leave. It is being discussed for our staying. From a historic view, America has left countries where other countries keep. That’s the Amerian way. McCain wants to stay until Iraq is stable. Obama beif changes. Worse part of Itaq will soon have no American soilders. Things have gotten so much better. Itaq people are taking over more control. Soon America will only be a back up.

  • Pats

    A very good try Bill, thanks. The uncovered loops are America is not the only state with the desire for Iraq’s stability. Britain too but when asked to leave, they left and are still leaving without further negotiation. Americans have been portrayed as occupants since the beginning of the invasion, why still negotiate when the very people you assume to be helping disregard your goodwill and ask you out? Secondly I don’t think it should be McCain’s role to determine when Iraq is stable or not. Iraq belongs to the Iraqs and should be responsible for their fate. My opinion is we should help them when they ask for it and I think they are very capable, knowlegdeable enough to ask the right people, at the right time , for the right help. Please correct me if I’m wrong.
    Do you think it is a right decision to pursue Iraq’s stability at the detriment of US in this economic crisis?

  • Bill Hedges

    Pats– Time is not up. Remember–end of year. The recent protest was said to be ignited by Iran. Would Iran want us out ? Not all Iraq people hate America. Many stories from our soilders differs with news coverage. Soilders sign up in Iraq because of their love for Iraq. America is now in talks, not with McCain but Bush. And Obama, now, is not saying leave Iraq immediately. What he will say tomorrow I do not know. I agree the people of Iraq are a great people. Woman now are treated better compared to women in the past. But give America no credit. Iraq people did that alone. Yes to your last question. I wish America could help every country that has needs. Of course we can not. And should not. War is expensive and cost American lives. Ther Countries can help. I let you decide if withdraw should be based on our financial woes.

  • EricF

    i hope you guys understand America can never really go broke. all they have to do is print more money. of course they dont like to print more money than needed because the more you have of something the less it is worth. same concept with diamonds and why only so many are made available at any given time. trust me when i say the economy will be back on track within a year unless of course if Obama gets elected and starts spreading the wealth, that would only bring down the value of the dollar and doom everyone.

    people act like we dont already have assistance programs for those that need it. nobody in America goes hungry unless they do so by their own stupidity. there are food stamp cards and soup kitchens out the butt. what it comes down to is people expecting something for nothing. people work hard to get ahead and shouldnt have the burden of giving away half their income so everyone can get a check once a year. checks like that get blown on material things anyway and is only a short term stimulant for the economy. Americans really need to get out of the short term thinking mindset.

  • Bill Hedges

    Jennifer– It makes no sense–Windfall profits applies to no other business that I can think of. Becaus of recent high increases of gas, Profits have gone sky high, thus, windfall profits. Oil companies do not keep any profits. After company pays all expenses, buy back stocks for future needs, buy equipment, etc., the rest is paid in divendens. As is done in any business. Stock owners receive the divendens. Including 401’s and retirement plans. Part of my retirement check comes from oil profits paid to my plan.

  • Bill Hedges

    Jennifer– Government holds auctions for off-shore sections and government lands. Oil companies bid on these sections. Winner has right to drill for a certain period of time. Companiy must go through many loops after winning just to drill. If all works out and they drill and find oil, they pay government an agreed amount per barrel……..In Alaska, there is State lands. Sarah worked out a contract with oil companies for drillings and production revenue for the State. Saeah has choicen to give cash to the people from this oil money. This is called Capitalism.

  • Deb

    Here is an article that makes some sense. Seems that at least one other country recognizes the fact that lower taxes on the wealthy will bring more of their money back home.
    http://www.ft.com/cms/s/0/c51da7cc-9be2-11dd-ae76-000077b07658.html

  • EricF

    wow! you guys have to hear this. very strong words from Philip J Berg.

    http://www.youtube.com/watch?v=pR0pKUs-mmI

  • Babs

    pudding, wrong again. Just because they called what Palin did in Alaska a “windfall profits tax” does not mean it’s the same as the windfall profits tax that Carter imposed in the 70’s, which was disastrous.

    To understand the difference you have to look at Alaska’s state tax structure, and how the oil profits fit into it. To compare the two is ignorant – they are entirely different. What Palin did in Alaska cannot be done on a federal level successfully.

    But those pesky democrats don’t want you to know that. 😉

  • Bill Hedges

    Babs– Am I wrong in my expamation ?

  • Babs, Palin has said several times that she got money from the oil companies and gave it to the people. That is no different to what Obama is proposes. You can dance around the subject any which way you want, but it’s a windfall profit tax, even if it isn’t exactly the same as Carter.

    Deb, are you suggesting that America adopts the same tax system as Taiwan? That could have some merit since China has a huge stake in Taiwan and they also do in America now…LOL

  • Pats

    Bill Hedges, thank you very much for our conversation. I very much apploud you for being very much matured and reasonable. The striking character about you is the way you present your points. I really appreciate your explanation. Thanks very much indeed.

  • Bill Hedges

    Pats–Thank-you

  • Deb

    pudding, not saying we should adopt Taiwan’s tax system but they have the right idea. Raising taxes for the wealthy is only going to trikle down to the middleclass in one way or another. Didn’t the oil companies pass the hike in oil prices to us? EXXON/MOBILE paid $27.9billion in taxes. That was on their earnings of $67.4 billion. So they paid at a tax rate of 41.4%http://www.lawcrossing.com/article/index.php?id=3993
    That is just one big company. If this is the tax rate that most companies pay it is no wonder they are sending jobs oversees. I am sure everyone of us knows someone who lost their job because their company sent work oversees because it was cheaper to build and ship back over here.
    The problem with Obama is he wants to take from the rich, anyone making over $250,000 a year and over, to give to the poor. Why should I be happy to give money to people who maybe chose not to work as hard as I did to make more money. Where is the incentive?

  • Here’s a thought for all the Christian Conservative Republican socialism is evil type people. Jesus HATED rich people

    Then said Jesus unto his disciples, Verily I say unto you, That a rich man shall hardly enter into the kingdom of heaven. And again I say unto you, It is easier for a camel to go through the eye of a needle, than for a rich man to enter into the kingdom of God. — Matthew 19:23-24, Mark 10:23-25

    But woe unto you that are rich! for ye have received your consolation. — Luke 6:24

    Go to now, ye rich men, weep and howl for your miseries that shall come upon you. — James 5:1

    So for all those that use Jesus and the Bible as a reasoning for your anti-abortion stance, why not adopt the same principle when it comes to money?

    Personally I have nothing against rich people, greed I don’t like and people unwilling to help those that need help really annoy me.

  • Bill Hedges

    Deb- go to tread ..Supreme cour rejects GOP—

  • I spotted a ‘factcheck’ news article when flicking the channels today and managed to find it on youtube. It breaks down what bracket you’re in for how much you earn and how much of a tax cut you’re likely to get under each candidate.

    Obama’s plan does favour the middleclass and McCains the upper income.

    http://www.youtube.com/watch?v=RJHeC8QLDug

  • John McCain the Socialist

    http://www.youtube.com/watch?v=d8EyGpOU3qM

    McCain right there stating how he voted against Bush’s tax cuts because it rewarded the wealthiest Americans. And him making the case for the upper class paying more than the lower class.