The Center for American Progress Action Fund has put together a study of candidate John McCain and the likely impact of his tax policies, as he has expressed them as a candidate, if he is elected president. Robert Gordon and James Kvaal conclude, in Five Easy Pieces and Two Trillion Dollars (March 2008), that McCain's professed tax agenda would:
- cost over $2 trillion;
- deliver 58% of its benefits to the superwealthy in the top 1% who have been the beneficiaries of the weak economic growth over the last 7 years;
- continue the shift of the tax burden to wage income from investment income;
- lead to increased use of tax shelters to avoid taxes;
- be paid for (if not by borrowing) by massive cuts in Social Security, Medicare and other programs that benefit the majority of Americans.
Here are some relevant links:
Krugman, Loans and Leadership (March 28, 2008) (assessing Obama, Clinton and McCain):
"Mr. McCain more or less came out against aid for troubled homeowners: government assistance “should be based solely on preventing systemic risk,” which means that big investment banks qualify but ordinary citizens don’t."
"But I was even more struck by Mr. McCain’s declaration that “our financial market approach should include encouraging increased capital in financial institutions by removing regulatory, accounting and tax impediments to raising capital.” "
"These days, even free-market enthusiasts are talking about increased regulation of securities firms now that the Fed has shown that it will rush to their rescue if they get into trouble. But Mr. McCain is selling the same old snake oil..."
Douglas Holz-Eakin, McCain's Economy Fix
This link is to an op-ed by candidate McCain's primary economic adviser, advising that he will support tax cuts for corporations to "ease" companies' burdens so they can create jobs. Problem with those kinds of tax cuts is that they don't often lead to jobs. The companies that got the 2004 tax cut in the "American jobs creation act" bill which permitted them to bring funds back from overseas at a ridiculously low 5% tax rate ended up cutting jobs instead of creating them.
He also says candidate McCain will support a "tax credit for research and development". That's something else the big corporations have been trying to get Congress to give them for years. It simply isn't justifiable under an income tax.
FactCheck.org, Supply-Side Spin (2007):
Republican presidential candidate Sen. John McCain has said that the major tax cuts passed in 2001 and 2003 have "increased revenues." He also said that tax cuts in general increase revenues. That’s highly misleading. In fact, the last half-dozen years have shown us that we can't have both lower taxes and fatter government coffers. The Congressional Budget Office, the Treasury Department, the Joint Committee on Taxation, the White House’s Council of Economic Advisers and a former Bush administration economist all say that tax cuts lead to revenues that are lower than they otherwise would have been – even if they spur some economic growth.
Jeff Frankel, Does McCain Suscribe to the Laffer Hypothesis (Mar. 27, 2008)
Almost all serious economists – let us say Ph.D. economists teaching at real universities – disagree with this [Laffer Curve--tax cuts generate revenues] proposition, with only a microscopic handful of exceptions like Laffer. Indeed some of the advisers who defend the Reagan and Bush economic policies claim that this formulation of supply side economics is a caricature, and was not the true rationale of the tax cuts. This wishful thinking is directly at odds with quotes from the presidents themselves and their Treasury secretaries and other economic officials, to the effect that tax cuts stimulate income so much as to produce more tax revenue. Laffer is not a straw man.
Economist's View (March 29, 2008), Let Them Eat Their Losses, linking to Paul Krugman, on the Gramm Connection, and Daniel Gross of Slate, Staying on Bush's Course--Here's Some Straight Talk, who has this to say:
"Reading McCain's economic agenda and listening to his speech, it appears that the problem with the last eight years is that we haven't seen enough tax breaks for the wealthy, that economic royalism hasn't been pursued with sufficient vigor, and that the middle and working classes haven't been stiffed sufficiently." Dan Gloss, Slate.com.
Citizens for Tax Justice (March 28, 2008), Center for American Progress Finds McCain Tax Plan a Continuation of George W. Bush/Grover Norquist Tax Agenda. CTJ concludes its review of the study with the following:
John McCain's views on taxes are either extremely mysterious or just totally unprincipled. As we have discussed before at length, he swung from a conservative position in the 1980s and 1990s to opposing tax cuts for the rich in the early part of George W. Bush's administration and now has swung back to the right with a plan that his own advisers admit would cause the deficit to grow.
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