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Reviewing the Obama and McCain tax plans

October 17, 2008 | By Nathaniel Ward

The Heritage Foundation’s Center for Data Analysis has conducted an in-depth study comparing the tax policies of the two leading Presidential contenders, Senators Barack Obama (D-Ill.) and John McCain (R-Ariz.).

Unless lawmakers act, the 2001 and 2003 tax cuts will expire, raising taxes on millions of Americans and threatening economic growth. This is of particular concern at a time of economic weakness, Heritage experts Bill Beach, Karen Campbell, Rea Hederman and Guinevere Nell argue.

The two plans share several key features: both keep portions of the 2001 and 2003 tax cuts in place; both would help prevent “bracket creep” under the Alternative Minimum Tax; both add to the federal deficit; and both would allow more economic growth than if the tax cuts fully expired.

But there are also key differences. For example,

  • Extension of the 2001 and 2003 tax cuts. While the McCain plan would keep taxes at their current low rates, “Senator Obama's does not extend the cuts for the top two rates.” In addition, the Obama plan includes a new Social Security surtax on those earning more than $250,000.
  • New Tax Cuts. “Senator McCain has proposed a few other cuts, highlighted by a cut in the corporate tax rate and a change in the tax treatment of health care.”
  • Health Care. Senator McCain's tax plan for health care would end preferential treatment of employer-provided insurance “and replace it with a tax credit that would allow families to purchase health insurance.”
  • Tax Credits. “Senator Obama has many new proposals, including several new tax credits. Senator Obama proposes a refundable health care tax credit to help low-income individuals purchase health care.”

The effects of the Obama and McCain tax plans

After conducting their careful economic analysis using tax models and outside economic data, Heritage’s experts made a few important conclusions about the plans’ differing effects:

· Jobs respond more to McCain's plan than to Obama's.

· Overall economic activity more vigorous under McCain's plan.

· More after-tax spending potential under McCain than under Obama.

In sum, “Senator McCain's plan is substantially better at spurring economic growth than Senator Obama's. This is not surprising, since Senator McCain focuses on economic growth and job creation while Senator Obama focuses on the redistribution of income.”

Judge Bork on the Constitution

Holding to an originalist interpretation of the Constitution is the only way to avoid arbitrary rule by judges, Judge Robert Bork said Wednesday at The Heritage Foundation.

In fact, he explained, today’s judicial system serves to undermine our republican form of government.

One significant problem is what he called “Olympianism.” Like the Olympic gods of ancient Greece, today’s intellectual elites will descend from on high to issue their rulings, he explained. “They are willing to share their superior knowledge or they will impose it on us.”

» Read more about Judge Bork’s talk on MyHeritage.org

 

—David Talbot

Help Heritage fight harmful EPA regulations

Heritage has launched a new website, StopEPA.com, to keep the Environmental Protection Agency “from hijacking the economy” with its proposed new regulations on carbon dioxide.

Intended to fight global warming, these regulations would impose tremendous costs on ordinary Americans.

» Watch the informational video and find out how you can help

Here are the important facts on this issue:

  • Costs to Ordinary Americans. These regulations will drive up gas prices, food prices, transportation costs, and the price of manufactured goods. Regular Americans will even have to carefully monitor their own greenhouse gas emissions in order to comply with the confusing EPA regulations.
  • Red Tape for Ordinary Americans. Americans could be forced to get federal permits if they use common household tools like lawnmowers or own homes that the EPA deems to use too much energy.
  • Lost Jobs. The higher energy costs and regulatory excess will cost millions of jobs.
  • Impact on Small Businesses. Many small businesses could be forced to close since they are less able to absorb the higher costs of energy, transportation, and goods, and less equipped to deal with the legal red tape of complying with such regulations. The red tape could keep entrepreneurs from starting the new companies that are at the heart of our economy.
  • Impact on All Businesses. Businesses small and large will be forced to pay massive new energy taxes. The red tape could keep entrepreneurs from starting new companies and ventures that are at the heart of our economy.
  • Reduced International Competitiveness. The massive new regulatory burden on domestic manufacturers will not apply to foreign producers, putting American businesses at a disadvantage.

—David Talbot

Other Heritage work of note

  • Rule of Law. How big a problem is voter fraud? Heritage expert Hans von Spakovsky, a former member of the Federal Election Commission, has been keeping a close eye on reports of voter fraud. He recently appeared on both Fox News (watch online) and CNN (watch online) to explain the problem with fraudulent voter registrations submitted by organizations like ACORN. Meanwhile, Wall Street Journal columnist John Fund will speak at Heritage on Monday on his new book about voter fraud.
  • Health Care. Writing on Heritage’s blog, Heritage’s Bob Moffit explains his new in-depth analysis of the Obama and McCain health care proposals. “Examining the key elements of these two competing plans, one can discern clearly two very different visions of America’s health care future. They are polar opposites. The Obama health plan would centralize power over health care financing and delivery in Washington. The McCain health plan would decentralize control over health care financing and decision-making among individuals and families, while retaining authority in the states. This is not a judgment; it is a fact.”
  • Rule of Law. The Heritage Foundation launched a new website yesterday, ImperialJudiciary.com. The site will expose activism in the courts and educate the public about the judiciary’s proper constitutional role. It will serve as a clearinghouse for information on activist rulings, judges who abuse their power and the judicial nomination process. The site will also include interactive polling, analysis of activist cases, publications and a video archive.

In other news

  • “North Korea threatened Thursday to cut all ties with South Korea, citing what it called the new conservative Seoul government's hostile policy,” AFP reports.

Upcoming Heritage webcasts

All webcasts will be shown live on MyHeritage.org. Recordings will be made available for online viewing after the event concludes.

  • On Monday, October 20 at 10:50 p.m. Eastern time, Heritage Trustee Steve Forbes addresses the economy and runaway government spending at an event sponsored by the Tucson Committee for Heritage.
  • On Monday, October 27, Sen. Tom Coburn explains the importance of holding to first principles when making policy at an event sponsored by the New York Area Committee for Heritage.

Coming up at Heritage

To attend these or any other events at Heritage please RSVP at Heritage's website. Or you can view these events live online. All times are Eastern.

  • On Monday, October 20 at noon, columnist John Fund from the Wall Street Journal discusses his research into voter fraud, detailed in the new edition of his book Stealing Elections: How Voter Fraud Threatens Our Democracy.