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McCain Seizes on Obama's Tax Plan Tweak

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October 23, 2008 1:00 PM

ABC News' Teddy Davis, Bret Hovell and Julia Hoppock Report: John McCain is seizing on an ABC News report about Barack Obama tweaking his tax plan to argue that his Democratic opponent will "say anything to get elected." 

"This week we learned that Senator Obama is concerned that his plan of wealth redistribution is seen as welfare," McCain said Thursday morning in Ormond Beach, Florida. "So he just added a work requirement. Twelve days to go, thirteen days to go in this election he changed his tax plan because the American people have learned the truth about it and they didn't like it."

McCain's latest criticism of Obama refers to comments made Tuesday by Obama adviser Austan Goolsbee at the Council on Foreign Relations. The University of Chicago professor said that the Obama campaign changed a minor component of its tax plan to avoid criticism that it was tantamount to welfare. He made his comments while debating Douglas Holtz-Eakin, McCain's top policy adviser.

While Obama did tweak his tax plan, McCain is overlooking that the only aspect of the Obama plan that changed was the universal mortgage credit.  Obama's other refundable tax credits were already work-related including his make-work-pay credit, saver's credit, child-care credit, and college credit.

In his new line of attack, McCain overstates the degree to which Obama's tax plan was altered. The work requirement articulated by Goolsbee on Tuesday might end up excluding fewer than 1,000 otherwise eligible Americans from claiming Obama's universal mortgage credit, according to an Obama campaign estimate.

The minimal impact is because the work requirement could be met simply by having worked in the last taxable year or by having a spouse who works.

While Obama's campaign could legitimately complain that McCain is overstating the degree to which the Democratic tax plan changed, the Obama campaign decided to put out a statement which overlooks what its own economic adviser told the Council on Foreign Relations on Tuesday.

"All of Senator Obama's tax credits only go to workers and they always have," the Obama campaign said in a statement e-mailed to reporters. 

The truth is that when Obama originally outlined his refundable tax credits -- the vast majority of them went only to workers.

But there was one refundable tax credit -- the universal mortgage credit -- which did not have an explicit work requirement on it which meant that it was theoretically possible for a very small number of Americans to get a check from the government under an Obama proposal even though they were not working.

"They started saying this was welfare," Goolsbee told the Council on Foreign Relations.  "So, just so they would absolutely not be able to say that, we decided that for the last two percent we'll simply add a work requirement."

"When did this change? I'm just curious," an incredulous Holtz-Eakin asked Goolsbee.

"About two weeks ago," replied Goolsbee, adding that when the proposal was announced in September 2007, 98 percent of its benefits went to workers.

Watch it HERE.

After speaking to the Council on Foreign Relations on Tuesday, Goolsbee argued in an interview with ABCNEWS.com that he was not referring to a policy change but rather a change in what the Obama campaign decided it needed to make explicit. Goolsbee said the Obama campaign always assumed that every American would know that any new refundable tax credit would be tied to work because the refundable tax credits in current law are work related.

The purpose of Obama's 10 percent universal mortgage credit is to aid taxpayers who do not itemize when filing taxes. The Obama campaign estimates that it would provide an average of $500 to 10 million homeowners, the majority of whom earn less than $50,000 per year.

While McCain has hammered Obama’s refundable tax credits as constituting welfare, the Republican nominee has proposed a refundable tax credit to help Americans pay for health insurance which does not have a work requirement -- it would benefit all Americans regardless of whether they are working or not.

October 23, 2008 in McCain, John, Obama, Barack | Permalink | User Comments (426)

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It is still socialism. If America becomes a socialist country that will be the end of America being the leader of the free world.

Posted by: emma | Oct 23, 2008 1:50:09 PM
----

Hey, look at China. They are doing pretty well, don't they? They are a socialist country, and they attracted all our jobs there.

It's Zero's big plan to bring back American JOBS from China. If Capitalism cannot do it, we might just follow up. Let's follow the done-nothing-doing-nothing-do-nothing Zero to the idea society of from-according-to-his-ability-to-according-to-his-needs.

Posted by: d0 | Oct 23, 2008 1:56:34 PM

Obama is a fraud. It will be proven in time. His followers are foolish little sheep who thinks their master can do no wrong. LOL LOL

Posted by: msa123 | Oct 23, 2008 1:57:48 PM

Chicago is spending 2 million to set up Obama's throne in Hyde park and that doesn't include the additional costs for police etc. I'd shut up about Palin's clothes.

Posted by: Hippie Smasher | Oct 23, 2008 2:06:11 PM

Okay, we have to guys trying to do what they can to get into the most powerful office in the world. Yeah, they are going to ... mislead. I think lie might be little over the top. They will twist the facts the way they want them to look. The ones that worry me the most are the reporters and how they turn all this into a big drama party. And yes, we all feed on it. To this story's core they are making a big deal out of a small turn of phrases. What does bother me is the experience issue. Now folks say McCain should not have picked Palin because of experience. Yes that might be true, but then you have Joe Biden poke'n that foot in his mouth all the time. Now if Joe is right about Obama being tested, then we will probably be in trouble. I think Bush screwed the pooch before 09/11. Still if we play off the comments Joe stated according to Obama, then did Obama make a good choice. So now you have to, literally, pick the lessor of 2 evils. I thought this back in 2000 with Gore and Bush.

Posted by: Sassy | Oct 23, 2008 2:06:37 PM

In 0bama's twisted world, his increase in everyone making more than $100K (NOT his lie of $250K) is tax cut for the middle class.

To blind supporters, anything Zero says is from political Jesus.

Posted by: Atom | Oct 23, 2008 2:08:00 PM

In 0bama's twisted world, his increase in everyone's tax who makes more than $100K (NOT his lie of $250K) is tax-cut for the middle class.

To blind supporters, anything Zero says is from political Jesus.

Posted by: Atom | Oct 23, 2008 2:09:19 PM

Obama and his Bolshevik drones want to play Animal Farm in the U.S.A. Obama is a master at manipulating the mindless drugged up emotional wrecks for their votes. He has the MSM covering for him and foot in mouth Biden. I'm an independent voting for McCain.

Posted by: Hippie Smasher | Oct 23, 2008 2:24:41 PM

How was Obama, a Illionis state legislator not making much money afford to buy a $1,160,000.00 home? How can he manage to keep his girlfriends? Are the democrats campaign headquaters paying for Obama's wife being locked away in a Waldorf Astoria Hotel suite ($1000 + a day). Isn't that illegal? Does Obama still use cocaine and marijunna? Who pays for it. Who scores for it? Questions, questions, questions. But not as stupid as the dimmocrats questions about Sarah Palin. Caio! wwterry

Posted by: Ww Terry | Oct 23, 2008 2:25:32 PM

Ww Terry

I disagree. Your questions really ARE that stupid. For one thing, the NY Post already printed a retraction of the stupid Waldorf-Astoria story. And bacause we have all seen Obama's tax records, we know very well where he got his money from.

Posted by: jock59801 | Oct 23, 2008 2:46:20 PM

The Wall Street Journal


Obama's Tax Plan Is Really a Welfare Plan


Barack Obama's tax plan is the opposite of supply-side economics. He proposes to raise marginal rates for just about every federal tax. He also proposes a raft of tax credits that taxpayers can receive if they engage in various government-specified activities.

Moreover, the tax credits would mostly go to those who pay little or nothing in federal income taxes. His trick is to make the tax credits "refundable." Thus, if the tax credit is for $1,000, but the taxpayer would otherwise only pay $200 in taxes, the government would write a check to the taxpayer for $800. If the taxpayer pays nothing in federal income taxes, the government would pay him the whole $1,000.

Such credits are not tax cuts. Indeed, they should be called The New Tax Welfare. In effect, Mr. Obama is proposing to create or expand a slew of government spending programs that are disguised as tax credits. The spending on these programs is then subtracted from the total tax burden, in order to make the claim that his tax plan is a net tax cut overall.

On the tax side of the ledger, the details released by his campaign last week confirm what a President Obama has in mind for our most productive citizens. The top individual income tax rate, for example, would be increased by 13%, to 39.6%; the next-highest rate would be raised to 36%. The top rates on capital gains and dividends would rise by a third, to 20%

The Social Security payroll tax would be raised between 16% to 32% for families making over $250,000 a year. This means that the real returns these people get from their lifetime payments into the retirement program will be driven below 0%, according to my own previous research, which was published by the Cato Institute and elsewhere.

Mr. Obama also wants a permanent federal estate tax, with a top rate of 45%; his health-insurance plan includes a new payroll tax on employers; and he also contemplates several increases in the corporate income tax, including a new so-called windfall profits tax on oil companies.

Then there is the spending side of the ledger. Mr. Obama proposes a fully refundable Making Work Pay Tax Credit, which would have the government pay out $500 to each worker and $1,000 to couples -- reminiscent of George McGovern's 1972 election proposal for the government to send a $1,000 check to everyone.

His American Opportunity Tax Credit would provide a $4,000, fully refundable tax credit for college tuition expenses. His Mortgage Interest Tax Credit would provide a 10% credit -- refundable -- to offset mortgage interest payments for lower- and middle-income families. His Health Care Tax Credits, which the campaign says "will ensure that health insurance is available and affordable for all families," include "a new refundable 50 percent health tax credit on employee premiums paid by employers."

Currently existing tax credits would also become spending programs in the Obama tax program. The Savers Credit would be made fully refundable, and would be expanded, according to the campaign, "to match 50% of the first $1,000 of savings for families that earn under $75,000." The Child and Dependent Care Tax Credit would be made refundable and expanded to allow "low-income families to receive up to a 50 percent credit on the first $6,000 of child care expenses."

The Earned Income Tax Credit is already refundable. Mr. Obama would expand it to "increase the number of working parents eligible for EITC benefits, increase the benefits available to noncustodial parents who fulfill their child support obligations, increase benefits for families with three or more children, and reduce the EITC marriage penalty, which hurts low-income families." In short, welfare spending is to be increased by paying more money out to low-income income tax filers.

The latest Congressional Budget Office data shows the bottom 40% of income earners already pays no income taxes. Indeed, they receive a net payment from the federal income tax system -- meaning from the taxpayers -- equal to 3.8% of all federal income taxes, because of the refundable tax credits under current law. The middle 20% of income earners, the true middle class, pays 4.4% of federal income taxes.

Overall, the bottom 60% of income earners pay less than 1% of federal income taxes on net. When "tax credits" primarily go to this group in the form of checks from the government (rather than a reduction in their tax burden) it is simply an abuse of the language to call the spending a tax cut.

Consequently, to say, as the campaign does say, that the candidate's tax plan is a tax cut on net -- and that it would limit taxes to 18.2% of GDP -- is grossly misleading. The Obama tax plan would sharply increase real taxes. It also would come nowhere near to paying for the massive increases in federal spending he has proposed, including the spending that is disguised in the form of refundable tax credits.


The Wall Street Journal

http://online.wsj.com/article/SB121910303529751345.html?mod=most_emailed_day

Posted by: Natasha | Oct 23, 2008 2:52:44 PM

Obama Alters Tax Plan to Rebut McCain!

http://blogs.abcnews.com/politicalradar/2008/10/palins-medical.html?cid=136089507#comment-136089507
----------------------------------

Ahahaha! Another flip-flop (some call it just a "tweak"...yeah right) by Barack Obama.

This can certainly be classified as the "mother of all flip-flops"!!

Barack Obama is a closet Marxist!

America wake up.

Posted by: Natasha | Oct 23, 2008 3:00:59 PM

" Does McCain think his voters are that stupid? "

That was a rhetorical question, right?

Dear John,
You might want to quit "seizing" on things. At your age, I'd be worried it might bring on a seizure.
Sincerely,
Concerned Republican
(who unfortunately had to vote for a Democrat this time around)

Posted by: Earl E. Voter | Oct 23, 2008 3:01:17 PM

Obama admits he supports Marxism during an interview with Bill O’Reilly on Fox News...


***The Obama [KGB] Squad has blocked the video but the text of the interview is still posted.


By Scott Miller

Karl Marx, author of The Communist Manifesto, penned the recap of his basic economic philosophy below:

“From each according to his ability, to each according to his needs”

Barack Obama, in an interview with Bill O’Reilly on Fox News, admits that he shares the above Marxist economic theory. Watch this (5:47 into the clip, but watch the whole clip):

“If am sittin’ pretty, and you’ve got a waitress who is making minimum wage plus tips, and I can afford it and she can’t, what’s the big deal for me to say I’m going to pay a little bit more… that is neighborliness”

No Senator, that is Marxism. What kind of dementia makes these liberal Marxists think they have the right to tell someone else, another free human being, how much money they should or should not have? It’s none of your damn business Barack… but the hell out!

And some of you thought I was exaggerating when I said this clown was a Marxist…


Obama Admits He Supports Marxism
http://theconservativepost.com/WordPress/?p=550

Posted by: Natasha | Oct 23, 2008 3:01:58 PM

Had John McCain been paying attention, he might have noticed this change earlier, like in the first debate between McCain and Obama.

Obama clearly said at that time, quite a few weeks ago, that his plan provides for tax cuts to 95 percent of working Americans.

So whenever it was changed, the change happened sometime before that.

Sorry, McCain, but you were asleep at the switch again.

Posted by: Paul | Oct 23, 2008 3:12:22 PM

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that's what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve.

"Since you are all such good customers", he said, "I'm going to reduce the cost of your daily beer by $20". Drinks for the ten now cost just $80.
The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his "fair share?"

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

"I only got a dollar out of the $20," declared the sixth man. He pointed to the tenth man, "but he got $10!"

"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got ten times more than I!"

"That's true!!" shouted the seventh man. "Why should he get $10 back when I got only two? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!"

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

Posted by: Patrick | Oct 23, 2008 3:15:02 PM

What does it matter when Obama clarified it? The bottom line is that his tax plan - other socioeconomic plans are Socialism/Communism/Marxism - with Obama it id hard where the heck he draws the line. His association with Ayers is an other example that the man does NOT know where to "draw the line"

Posted by: Natasha | Oct 23, 2008 3:18:08 PM

Natasha

I realize that you think helping people is Marxist. And apparently fairness is Marxist. But did you know that McCain is on record saying EXACTLY the same thing as you just quoted from Obama? Maybe we're all Marxists! ***YAWN***

Posted by: jock59801 | Oct 23, 2008 3:18:29 PM

that's why we need Obama. He sees where something needs to be changed and does it. He doesn't just call the other person dispicable things. C'mon McCain get on the issues, win on your own merits if you have any, you don't tear the other guy down to make yourself seem worthy. It disgusts me to no end to hear such drivel from the Republicans, you used to be known as honorable,now you can't even get your old friends to endorse you.

Posted by: Brenda | Oct 23, 2008 3:18:44 PM

For those claiming no 'alternatives' are offered except screaming Socialism ....the real BS!

(1) How about NO TAX INCREASES on ANYONE! Ever thought of that Liberals?

John McCain is on record for this policy

(2) How about a FLAT or FAIR TAX OF 20% ACROSS THE BOARD. No loop holes for individuals or businesses.

John McCain is on record supporting this policy

(3) How about NO TAXES AT ALL ON CAPITAL. We ARE (were) a Capitalist system.

John McCain is on record supporting this policy

(4) The 'needy & poor' will get CHARITY. No more entitlements as previously defined. Americans can afford to support ALL those in need of this charity.

No candidate supports this policy. Too bad.


(5) Sex, Drugs, Marriage, abortion: Everyone is on THEIR OWN. You want these things YOU PAY FOR IT YOURSELF. NO 'Federal' government involvement AT ALL.

John McCain is on record supporting some of these policies

No 'Federal' government involvment due to the negative results of those decsisions like: No free abortions, no drug counseling or drug related healthare (sanitarium like the old days), Marry your Dog for all I care (helmsley), let the State YOU LIVE IN provide those services.

These policies could reunite the nation and put PERSONAL & CIVIC RESPONSIBILITY back in vogue. The 50 States can start taking more responsibility for 'their local citizens and their local issues'.

Leave the Federal Government alone to protect the boarders, protect from foreing invaision, and tend to the 'administrative' requirments of the Constitution.

Posted by: Patrick | Oct 23, 2008 3:19:45 PM

So, adjusting a plan based on more current information is considered, "doing anything for a vote." Whereas, staying in the same path for years at a time, not wavering course, despite obvious failure is considered, "good leadership."

Posted by: Zach | Oct 23, 2008 3:21:24 PM

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