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The Candidate: Barack Obama (D)
The Issue: Taxes
The Position: Lower some/raise others
The Cost: “When you raise taxes you hurt the economy.” (Source: Duane
Parde, National Taxpayers Union )
The Media Position: Tax cuts “cost” the government money.
The Issue
With Sen. Barack Obama
proposing at least $293 billion in new spending and Sen.
John McCain proposing at least $92.4 billion in new
spending, according to conservative estimates by the
National Taxpayers Union Foundation, the candidates must
find a way to pay for their promises. After all,
government money doesn’t just appear; it comes from the
taxpayers.
But the media insist that
lowering taxes in the face of increased spending
proposals amounts to a “cost” to the government, rather
than a relief to taxpayers.
In 56 of the more than 218
stories on broadcast networks mentioning tax cuts, they
were described as a “cost” to the government. Only 31
stories since the beginning of 2008 have featured voices
labeling tax cuts a “relief” to Americans struggling in
a slowed economy.
The two candidates have
starkly different plans for four major areas of the tax
code – income, capital gains, corporate and estate
taxes. Obama proposes lowering income taxes for lower-
and middle-class earners, but raising taxes on people
making more than $250,000 a year.
He has also proposed raising
the corporate and capital gains tax rates, but has
shifted his positions. Obama wants to “eliminate all
capital gains taxes
on small and start-up businesses,” but has proposed
raising capital gains taxes on individuals.
Obama’s plan would mean
raising the capital gains tax on about half of American
households – those who have money in the stock market –
from the current rate of 15 percent
to 20 percent. He has previously supported raising
the rate to 28 percent. He says he’ll use the expected
increased revenue
to pay for middle-class tax relief.
Obama has also opposed
lowering corporate tax rates even though the United
States has the second-highest corporate tax rate among
competitors.
“He’s calling for nearly $2
trillion in corporate tax cuts over the next decade, but
he hasn’t even proposed a single measure to protect
hard-working Americans from credit card companies that
are trying to take advantage of them,” Obama said of
McCain in
a June 11, 2008, speech.
Rather than cutting corporate
taxes as McCain would do, Obama proposed closing tax
“loopholes” to increase federal revenue from taxes
already in place.
The Media Position
The candidates’ differing
approaches to taxation have sparked a lot of media
attention – more than 218 mentions on the broadcast
networks. But the coverage portrayed tax cuts as a
“cost” to the government almost twice as often as it
characterized them as a “relief” to taxpayers.
Fifty-six of the 218 stories
mentioning “tax cuts” characterized them as a “cost” to
government. While both candidates have claimed their
cuts will benefit taxpayers in a time of financial
strain, only 31 stories since the beginning of 2008 have
labeled tax cuts as “relief.” However, sometimes it
makes a difference which candidate journalists are
talking about.
While journalists have
criticized McCain’s tax cuts as a “cost,” they’ve
praised Obama’s “cuts” and glossed over his proposed tax
hikes.
A September 2007
headline in The New York Times declared Obama
“proposes tax cuts for middle class and elderly.” The
article touted $85 billion in tax relief Obama proposes
for homeowners, workers and the elderly. But it did not
seek out equally impressive numbers to illustrate the
effect of his proposed capital gains and corporate tax
rate increases.
The broadcast networks – ABC,
CBS and NBC – have offered little detail in coverage of
specific tax-related issues. Since the beginning of
2008, they’ve mentioned the “capital gains” tax 38
times.
Most of the mentions came from
candidates or their representatives, as journalists
conducting interviews stuck to broad topics. But when
they approached capital gains, reporters certainly
didn’t favor cutting the tax.
“Rudy Giuliani proposed
lowering corporate tax rates and capital gains taxes,
costing trillions,” Andrea Mitchell said on the January
12 “Saturday Today” show on NBC.
Talking about an existing
“loophole” in the capital gains tax on the January 17
“Today” show, co-host Ann Curry exclaimed, “My goodness”
at the thought of not having to pay capital gains tax on
profits from the sale of a home after a spouse’s death.
Network viewers wouldn’t have
any idea about the candidates’ differing positions on
the estate tax. NBC is the only network to have
mentioned the tax, and none of its three mentions were
related to the campaign. Instead, they were included in
financial self-help segments.
ABC allowed liberal
billionaire investor Warren Buffett to slam the current
capital gains tax rates as too low on two separate
occasions – “World News” May 3 and “Nightline” May 16.
“[M]y cleaning lady, who pays more on her payroll tax
than I pay on capital gains, she doesn’t have a
lobbyist,” Buffett said.
Other contributors managed to
balance the picture a bit. Dick Morris told the June 24
“Today” show that increasing capital gains taxes would
“drive capital away from the United States.”
Journalists have
long opposed tax relief, assuming lower tax rates
must mean a bigger deficit – even though a surge of
higher tax revenues in 2005 led to a $100-billion
reduction of the deficit.
The media’s long history of
opposing tax relief has been accompanied by a tendency
to
spin many tax issues – from tax cuts “for the
wealthy” to tax cuts as “costs” to the government to
calling tax breaks “loopholes,” implying those who use
legal deductions are doing something wrong.
The networks have consistently
supported other taxes as well, including a
windfall profits tax on Big Oil companies – a
proposal Obama supports.
Higher Taxes Hurt
Characterizing tax cuts as a
“cost” to the government, as reporters have done time
and again, is evidence of a distorted view of the
government’s role as money manager.
“It’s a lie,” National
Taxpayers Union president Duane Parde said of the
characterization. “It’s another example of the media
being in the tank for big government.”
“Even taxes that all or most
people would regard as legitimate are still monies that
initially belonged to people that as democratic citizens
they chose one way or another to allow the government to
have in order to carry out the business of the state,”
George Mason University economist Dr. Donald Boudreaux
said. “The idea of talking about tax cuts as a cost to
government very sneakily changes the presumption. The
presumption is that, well, it’s the government’s money,
it initially belongs to the government and by the
government letting you keep more of what you earn …
that’s a cost to the government.”
He compared the government
cutting taxes to a thief who decides to steal less. “An
analogy would be if a thief, say who was stealing
$30,000 annually on average, decided to cut back on his
thievery. You could say – and people would know what
you’d mean – well, if the thief now steals only $20,000
annually you say well it costs the thief $10,000 to stop
thieving. But most of us would regard that as an abuse
of terms because it would presume that somehow the thief
has a right to that money.”
CNNMoney.com
reported June 11 that the difference between McCain
and Obama for the wealthiest taxpayers is a nearly
$1-million spread. McCain’s plan would mean an average
$269,364 savings for taxpayers with incomes greater than
$2.9 million. Obama’s plan would raise the same
taxpayer’s bill by $701,885.
In fact McCain’s plan would
result in lower taxes for all taxpayers, according to
analysis from
the liberal Tax Policy Center, while Obama’s would
raise taxes on Americans making more than $227,000 and
lower taxes on other incomes.
Wall Street Journal columnist
John Fund wrote in the June 2008 issue of Newsmax that
Obama’s “fairness” rhetoric on tax proposals “is really
a euphemism for class warfare, a higher priority for him
than economic growth.”
“Keeping capital gains tax
rates low is only common sense,” Fund wrote. “Low taxes
on capital mean people have more incentive to save and
invest because the returns are greater.” Fund attributed
federal surpluses under the Clinton administration to
the lowering of the capital gains tax rate to 20
percent.
“To pay for all these new tax
carve-outs, U.S. marginal tax rates applied to those at
the top of the income scale would rise to their highest
levels since the 1970s – a period of profound economic
stagnation,” Fund wrote.
“Taken as a whole,” Fund
concluded, “Obama’s high tax agenda would suck the
lifeblood out of our economy. One wonders if he
sincerely believes in his program.”
“Obama wants to raise taxes
and when you raise taxes you hurt the economy, you take
money out of individual pockets, you increase the size
of government and you have less individual freedom and
liberty,” Parde said.
Dan Mitchell, a senior fellow
at the Cato Institute, predicted Obama’s tax policies
would make the United States more like France.
“[A] country like France that
says, ‘Oh the top 5 percent, we can rape and pillage
them to finance all our spending,’ what happens?”
Mitchell asked. “The money, the investment, the jobs,
the capital wind up going to other countries with better
tax policies such as, say, Switzerland or Ireland. Well,
if Sen. Obama wants to make America more like France,
unavoidably that is going to mean French-style economic
stagnation: higher unemployment, lower growth and lower
living standards.”
He said “class warfare tax
policy” meant to affect the very wealthy would end up
hurting average Americans.
“You drive productive
activity to other jurisdictions, you wind up convincing
the investors and the entrepreneurs that America isn’t a
good place to do business, and we’ll wind up being less
competitive and we’ll wind up having lower incomes,” he
said.
The Heritage Foundation,
however, estimated the Obama tax plan would have a
positive impact on jobs and gross domestic product
(GDP). The foundation’s Center for Data Analysis (CDA)
predicted an
annual average of 920,000 new jobs under Obama’s
plan. But McCain’s plan, cutting taxes across the board,
would produce 2.13 million new jobs each year, they
estimated.
The CDA estimated Obama’s
plan would encourage $101.7 billion in
average annual GDP growth through 2018 – compared to
a $283.7-billion annual average under McCain’s plan.
McCain: Read
about the media characterization of tax cuts as a “cost”
to government.
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