Obama camp defends tax plan
Posted: Thursday, August 14, 2008 4:32 PM by Mark Murray
Filed Under:
Economy
From NBC/NJ's Athena Jones and NBC's Alex Wall
The Obama campaign held a conference call today to draw attention the Illinois senator’s tax plan and to “set the record straight” regarding what it called false, misleading, and inaccurate representations about his proposals by his rival.
Former Treasury Secretary Lawrence Summers, economic policy director Jason Furman, and senior economic adviser Austan Goolsbee (who sparked controversy last spring, when reports surfaced that he had downplayed Obama’s plans to renegotiate NAFTA), took part in the roughly half hour call, which revealed new details on capital gains and dividend tax rates for the wealthy.
Furman and Goolsbee published an op-ed on Obama’s plan in today’s Wall Street Journal, which sought to communicate a message the campaign has repeated over and over again -- that Obama’s plan is better for middle-class families, while McCain’s favors big corporations and the wealthy. The campaign launched a new Web site today with details of the plan, comparisons with McCain’s proposals, and rebuttals to what the site calls the “baseless claims” that the presumptive Democratic nominee would dramatically raise tax rates.
While McCain's campaign has said that an Obama Administration would mean higher taxes, Furman said that Obama's plan would amount to an overall net tax decrease and would reduce taxes for middle-class families to a level that is lower than it was during the Reagan Administration. Obama would pay for it by cutting spending -- by ending the Iraq war, limiting payments for high-income farmers, and eliminating other wasteful and unnecessary programs and payments. Furman said that by the fourth year of an Obama Administration, their “very conservative” budget projection shows savings of $90 billion from ending the war in Iraq.
Summers said Republicans were recycling old arguments that Democrats’ tax plans would harm the economy, which did not prove true during the 1990s, a time of great economic expansion. He criticized McCain for proposing a large tax cut -- $3.4 trillion of tax cuts over 10 years -- without paying for it, and said Obama’s plan was more equitable and more fiscally responsible. “There’s nothing approaching a description of spending cuts that will finance this deficit and that means you’re gonna have to pay for those tax cuts in the future with higher tax rates,” he said.
Obama would roll back a portion of the Bush tax cuts for families making more than $250,000 and would “leave their tax rates at or below where they were in the 1990s,” Furman and Goolsbee said in their op-ed. That would put the top two income-tax brackets at 36% and 39.6%.
“Barack Obama's plan would cut taxes for middle class families, and when you take the entire tax proposal as a whole, would cut taxes as a whole to less than 18.2% of GDP,” Furman said. “That's lower than the level of taxes when Ronald Reagan was president.”
When asked about claims that Obama voted for raising taxes on lower income families, Furman called the McCain campaign’s argument “completely false.”
“The McCain campaign is relying on a vote for a Baucus amendment to the budget resolution that John McCain voted for as well,” Furman said. “Organizations like the Committee for a Responsible Federal Budget said [the amendment] was not a tax increase and that would have in fact cut taxes on middle class families."
The wall Street Journal op-ed included, for the first time, specific details on capital gains and dividend rates that Obama proposes for these families. The top capital-gains rate would be 20% and the tax rate on dividends would also be 20%. Goolsbee said a capital gains rate of 20% would be almost a third lower than the rate Reagan set in 1986 and that the dividend rate would be lower than the vast majority of the years that dividends have been taxed.
Furman said that while Obama would not raise taxes for families making less than $250,000, McCain could not make the same point, because he proposes taxing families for the health care their employers provide -- a plan Obama’s advisers say would “impose a $3.6 trillion tax increase over 10 years on workers” since the Arizona senator’s proposed health care tax credits likely would not cover the tax increases resulting from his plan.
The advisers said any changes to Social Security -- Obama proposes calling on those making over $250,000 to contribute 2% to 4% more -- would not be phased in for another decade.
