This kind of reporting from Deborah Solomon at The Wall Street Journal is the kind of thing we're going to miss when Rupert Murdoch gets around to destroying the paper:
Both John McCain and Barack Obama promise to cut taxes for the majority of Americans. But an Obama administration would redistribute income toward lower- and middle-class households, while a McCain White House would steer the bulk of the benefits to the wealthiest families, according to a nonpartisan analysis of the still-evolving tax plans of the presidential candidates.
What's more, the story's not in the tank for Obama, either, correctly noting that his tax proposals, though better in distributive terms, are also kind of bad:
Both plans risk causing more economic damage than improvement, according to the detailed study by the Washington-based Tax Policy Center. While some of Sen. McCain's tax cuts could lift economic activity, the "adverse effects of the resulting increased deficits may make the net effect of the plan economically harmful," the report says. Sen. Obama's plan similarly "would substantially increase the deficit" and could create "additional complexity" to the tax code by offering a range of targeted breaks.
Here's a link to the Tax Policy Center's analysis. Long story short, both candidates have deficit-increasing proposals that will likely reduce economic growth. But McCain's take a bigger hole out of the budget and the benefits are much more concentrated among the wealthiest Americans.
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Heads in the Sand
I personally wish Obama's proposal was even more fiscally responsible, but I do think it is important to note that when you score the plans using a "current policy" versus "current law" baseline (meaning you assume the baseline is the current tax structure continuing indefinitely, as opposed to assuming all the various sunsets take effect), Obama's plan does in fact raise revenues, whereas McCain's plan decreases revenues (specifically, "Against current policy, Senator Obama's proposals would raise $700 billion, an increase of 2 percent, and Senator McCain's proposals lose $600 billion, a decrease of roughly 2 percent.").
So I would suggest Obama's plan is not a bad first step from here (where "here" means the current tax structure). I do hope it will only be a first step, however, with these issues being revisited no later than a hypothetical President Obama's second term.
Posted by DTM | June 12, 2008 8:31 AM