McCain, Obama trade jabs over tax plans

Adam Aigner-Treworgy NBC/National Journal Reporter

ALBUQUERQUE, N.M. -- Republican presidential candidate John McCain has taken to linking the GOP's traditional campaign message on taxes with a more immediate theme -- his differences with Democrat Barack Obama -- in a half-joking way on the stump.

"I just want to establish one fundamental fact with you," McCain told a group of voters in Belleville, Mich., this week. "If you want a president of the United States that's going to raise your taxes, I'm not your candidate. I'm not your candidate, Senator Obama is. I just want to make that very clear."

Obviously, McCain doesn't expect to dissuade many undecided voters with his reverse sales pitch. But with the struggling U.S. economy looming as the biggest issue in this election, McCain, like Obama, knows his words on taxes and his positions on the federal government's role in repairing the market are sure to be closely monitored.

McCain felt the increased attention last week when surrogate Phil Gramm -- national co-chairman of the Arizona senator's campaign and one of his top economic advisers -- made national news for calling the current economic downturn a "mental recession" and America a "nation of whiners." And both candidates have been asked repeatedly about a bailout for government-backed mortgage corporations Fannie Mae and Freddie Mac.

As the rhetoric heats up between the candidates themselves, it's important to watch how they emphasize different aspects of each other's proposals to make a point.

McCain does his best at every event to paint his opponent as a stereotypical tax-and-spend liberal, a label that simultaneously creates cracks in Obama's promise of a new kind of politics and in voters' faith that the Illinois senator can handle the economy. The problem with this label is that many independent groups have concluded that Obama's tax plan actually offers more cuts to those in the middle and lower income brackets than McCain's.

Analyzing a tax plan is a complicated feat, particularly since each candidate's plan changes as time goes on and policies are phased in or out. The much-publicized report released last month by the Tax Policy Center, a joint project of the Urban Institute and the Brookings Institution, analyzed the effects of the candidates' plans both immediately after the election as well as after 2011, when President Bush's 2001 and 2003 tax cuts are set to expire. Obama plans to preserve the sections of these tax cuts that apply to those making less than $250,000 per year, while McCain -- who initially opposed both tax cuts -- plans to make them permanent and add more of his own.

According to the TPC's comparison, "the Obama tax plan would make the tax system significantly more progressive by providing large tax breaks to those at the bottom of the income scale and raising taxes significantly on upper-income earners. The McCain tax plan would make the tax system more regressive, even compared with a system in which the 2001-06 tax cuts are made permanent. It would do so by providing relatively little tax relief to those at the bottom of the income scale while providing huge tax cuts to households at the very top of the income distribution."

So although it may be true that Obama's tax plan quantitatively offers more tax increases, as McCain frequently advertises, the TPC found that once Obama's entire plan is in effect in 2012, it will benefit lower- and middle-class taxpayers significantly more than McCain's. And each income level would "on average, receive a tax cut, but those at the very top of the income scale would receive tax increases."

There are additional corporate tax loopholes addressed in the Obama plan that are not included in the TPC's comparison because they do not directly affect individual filers, and the McCain campaign adds these to the tally of the Democrat's proposed tax increases. This approach allows McCain to emphasize the number of tax increases rather than their effect on the average taxpayer, making Obama's plan sound more dangerous than it may actually be to the voter listening.

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