New York Times editorial, April 24: This is the reality: To restore the health of the budget, let alone keep ambitious campaign pledges for spending more money, the next president, regardless of which party wins, will have to tax the American people more than any of the candidates has been willing to admit. Senator John McCain’s tax talk is particularly divorced from reality.
New York Times editorial, today: Senator John McCain scored some points on Thursday merely by acknowledging how much has to change. Mr. McCain said in a speech that if elected, he will … eliminate a tax meant for the rich that is crushing the upper-middle class.
The Times today praises John McCain for his proposal to repeal the Alternative Minimum Tax. The McCain campaign itself estimates that proposal will cost $60 billion a year, with no plan to pay for the cut. With 47 million people uninsured, with 37 million people living in poverty, with a “war and economic crisis” (in the Times’ words), a $60 billion tax cut for the upper-middle class surely is not a national priority.
And who will really benefit? John McCain says that his plan will benefit 25 million middle-class families, and Factcheck.org buys into the logic of that claim. But this would be true only in a world without the AMT “patch” that Congress has repeatedly enacted to shield the middle class. Although Congress each year enacts only a one-year patch, the patch is supported by large majorities of both Democrats and Republicans. There is a debate about whether to pay for the patch, but Douglas Holtz-Eakin is right to say that it is only in “fantasyland” that would Congress fail to extend it.
So, by a sensible logic—and by the McCain campaign’s own logic in pricing this proposal at $60 billion—the guts of McCain’s proposal is to go beyond the patch and fully repeal the AMT. And as between the patch and full repeal, according to the Tax Policy Center, more than 90% of the benefits would go to taxpayers making more than $200,000 a year, and nearly 50% of the benefits would go to taxpayers making more than $500,000. Only 3.6 million taxpayers would benefit, not 25 million. Here’s the distribution of winners:
As the Times instructed in its April editorial, “anyone making anywhere near a quarter-million dollars a year is in the top 3 percent or so of taxpayers.” It would be nice to give these families another tax break, above and beyond the patch. Of course, it would be nice to eliminate taxes for everybody. But leaders need to have priorities. And editorial boards too.