This presidential election will provide two clear distinct visions for what we do about taxes.
Both Democratic candidates, duking it out today in the Pennsylvania primary, want more of them; Senator John McCain made it clear last week he wants less of them.
However, the Democrats haven’t been all that clear about how they want to raise taxes other than to say they want to end the Bush tax cuts "for the rich."
Take the Alternative Minimum Tax (AMT) that sits like a vulture ready to attack Americans who are leading successful, upper-middle income lives. McCain said last week he would like to end it, not mend it.
Of course, because of the arcane way Congress “scores” (i.e., estimates the fiscal impact of a bill), ending the AMT will cost a lot of money—that’s money Congress can’t use to expand other programs. So it’s all good!
We aren’t entirely sure where the Democrats are on the AMT. Senator Clinton has worked in the past year or so to delay or minimize its impact, but not because she is a new-born proponent of lower taxes. Her New York constituents are probably the hardest hit group in the country by the expanding AMT.
Obama’s thin tax plan, as posted on his Website, does not even address the AMT.
McCain wants to cut the corporate tax rate from 35 percent to 25 percent. That’s one of the best proposals on the table. As economists know, corporations don’t pay taxes, individuals do. High corporate tax rates simply raise the price of goods and services—not a good idea in a global economy. And they drive companies to other countries.
Obama has been flirting with the idea of raising the top capital gains tax from 15 percent to maybe 25 percent or 28 percent. Billionaire Warren Buffet told Obama he didn’t think anyone would notice.
Maybe Buffet wouldn’t notice, but the Treasury does. Every time it lowers the capital gains rate it takes in more revenue.
McCain was also heavily criticized last week for proposing to change how corporations deduct expenses. Liberals called this a huge tax break for corporations. But in a day when technology is changing so fast, it makes no sense to have to depreciate new assets like computers, or even chip manufacturing “clean rooms,” over several years. They are out of date by the time they are fully depreciated. Accelerating the tax deduction as McCain proposed would encourage companies to invest and upgrade more often, which spurs economic growth.
We are still six months out from the election, so a lot of things could change, but this is shaping up to be an election where the bottom line will be . . . the bottom line.