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.