What You Need To Know About McCain’s Economic Speech Today
Our guest bloggers are Robert Gordon and James Kvaal, fellows at the Center for American Progress Action Fund.
Earlier today, Sen. John McCain outlined a series of economic proposals in a Pittsburgh speech. Here is reaction to his speech:
Corporate Tax Cuts Are Still Front and Center: By far, the biggest and most expensive part of McCain’s tax agenda remains his $1.7 trillion tax cut for corporations. There is little evidence that taxes are hurting American competitiveness; corporate taxes are the fourth-lowest in the industrialized world as a share of the economy.
Tax Cuts Blow a Hole in the Budget: McCain’s tax cuts now total approximately $300 billion a year (in addition to the cost of making the Bush tax cuts permanent). But McCain’s proposals to pay for these tax cuts fall far short. For example, he specified only budget cut — charging higher premiums for the Medicare drug benefit — and that would save only $1 billion a year.
The Gas Tax Break Is Temporary: Unlike McCain’s corporate tax cuts, the gas tax rebate would apply only in 2008 – before McCain could be president and implement these ideas. While offering some help to drivers, it would add $11 billion to the deficit.* A better approach would replace those revenues by repealing special tax breaks for oil companies.
Deliver Most of Its Benefit to the Top: Before today, McCain was running on an extremely regressive tax agenda that delivered 58 percent of its benefits to the top 1 percent of taxpayers and only 9 percent to the bottom 80 percent. Doubling the dependent exemption – while not as regressive as McCain’s earlier plan – still gives less to regular families than to high-income families in higher tax brackets:
– It is worth $1225 per child for a high-income earner.
– It is worth $525 per child for a middle-income earner.
– It is worth nothing to many members of the working poor, who do not pay income taxes (despite paying thousands in payroll and other taxes).
The Wonk Room’s more detailed analysis of the McCain speech is available here.
* Because the gas tax is earmarked for investments in infrastructure, the post originally expressed concern of the negative impact on transportation and mass transit. However, this afternoon the McCain campaign clarified that the its proposal would contiune to pay for transportation investments out of general revenue.
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3 Responses to “What You Need To Know About McCain’s Economic Speech Today”
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All I can say is four more years of Reagan-nomics means deficit, war and the rich keep getting richer off of the backs of the working man, how about some relief here Johnny.
April 16th, 2008 at 9:48 amIt’s all a load of crap. All republicans do is transfer wealth from the middle and lower class to the rich corporation. Every dollar they make(top 1%)becuase of the tax cuts goes to buying more stocks from companies that have rigged the system so they can never fail. Health care and pharmsuitical drug plans are rigged so the average citizen is forced to comply without any real competition. Therefore stocks never go down and the rich keep getting richer. HOW ELEIT .
April 16th, 2008 at 10:24 amSaying “corporate taxes are the fourth-lowest in the industrialized world as a share of the economy” is sort of useless, and very misleading.
Useless because if our economy grows to twice the current size, does the cost of government really grow twice as expensive? That’s the logic that led to states like Florida having massive tax booms because of the rising property values. Instead of keeping costs level or growing with population and inflation, they simply found new ways to spend billions more. Extra income is no excuse to find new ways to spend money.
Misleading because it make the tax rates in the USA sound competitive and inexpensive, which is far from the truth. World Bank and PricewaterhouseCoopers did a study published as “Paying Taxes 2008: The Global Picture”. What they found from the 178 nations researched in the study is that 101 of them have lower tax rates than the US, 121 of them had tax codes that took less time to comply with.
The global movement in corporate taxes is downward, and significant tax reform is happening internationally. 31 countries in the past year and 65 in the last three years have either reduced the corporate tax rate (most popular), or made compliance easier by simplifying or eliminating some business taxes.
When a large investor is looking for a country to invest their money in, is the US a good choice? When a large multi-national company wants to make a new factory, is the US a good choice? Not when 101 other countries have a lower tax rate than we do. Our corporate tax code/mindset is destroying our ability to be competitive on the international level.
In years past perhaps it didn’t matter as much, the US was the dominant nation on earth. But with so many emerging nations, the European Union, and China becoming economic powerhouses it is simply a matter of time before the US becomes an afterthought, if we fail to act.
May 12th, 2008 at 6:06 pm