Wednesday, October 29, 2008

Why Not McCain?

My late father once boiled down the difference between the parties to one factor: Republicans, he said, are for the rich; Democrats are not.

Times have changed, of course, and we have Democrats from the Democratic Leadership Council and New Democrat Coalition and their ideological blood-brothers (and sisters) who traditionally support policies friendly to corporations at the expense of the middle class. Still, we have John McCain here to remind us that Repubs still try to funnel as much money as possible to the economically powerful. For starters, he has proposed:

*cutting
the capital gains tax in half, from 15% to 7.5%, for two years (which would have reduced the McCains’ taxes by $55,761 in 2006 and $55,980 in 2007 (a two-year total of $111,740). Thinkprogress.org reports that according to the Tax Policy Center, "families earning more than $1 million a year collected 59 percent of capital gains. Moreover, most middle-class families with capital gains hold their investments in retirement accounts shielded against capital gains taxes."


*lowering

the corporate tax rate from 35% to 25% and allowing corporations immediately to write off the cost of investments in equipment and technology . But the Center for American Progress finds the largest 200 corporates would get a combined $45 billion tax break and

Corporate tax breaks are extremely regressive. Corporate taxes are ultimately paid by investors, according to the longstanding view of the Treasury Department and the Congressional Budget Office. As a result, approximately 59 percent of these tax cuts would go to the top 1 percent of households. Only 11 percent of the benefit would go to the bottom 80 percent of households.


Finally, these corporate tax breaks are unlikely to help the economy. They drive up the federal budget deficit, resulting in higher interest rates and lower private-sector investment. Taxes paid by U.S. corporations are among the lowest in the world, measured as a share of the economy. And as Michigan University law professor Revuen Avi-Yonah points out, "experience indicates that corporate rate cuts, like the temporary reduction in the tax rate on dividends from foreign subsidiaries from 35 percent to 5.25 percent, have resulted in increased profits for U.S. corporations but no increase in jobs or overall economic growth."


*lowering income taxes for millionaires and multi-millionaires... As this chart from The Washington Post, based on an analysis from the Tax Policy Center (joint effort of Urban Policy Institute and the Brookings Institution) indicates, the average family making over $2.87 million annually would reap a bonanza of $269,364, an average drop of 4.4%. That's nice for those folks, not so much for the federal budget and the rest of us who would be picking up the pieces. And the McCains themselves? (Given the McCains' reported income in 2006, and repealing the Alternative Minimum Tax proposed by the Arizona senator, the McCains under the latter's plan would have saved $373,429 , $5,641 under the Obama plan.)


John McCain has reversed his opinion on virtually every issue over the past several years, including the Bush tax cuts. But one thing stands clear with the McCain-Palin ticket: it sees the widening gap between the wealthy and the rest of us in American society- and is discouraged it's not larger.



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