Obama’s Tax Plan — BETTER for Growth
2:55 pm October 16th, 2008Yesterday’s debate — unlike much of what we’ve seen so far in this campaign — included reasoned, substantial discussion of issues and underscored some of the legitimate policy differences between the two candidates. One major policy difference, of course, is their tax plans — illustrated with the “Joe the Plumber” example. Obama, in the tradition of the Democratic party, favors a progressive tax plan that taxes lower-income people at lower rates; McCain, in the tradition of the Republican party, favors a plan that taxes people at more equal rates, so that lower-income people pay a higher percentage of their income in taxes than under Obama and higher-income people pay a lower percentage.
Culture wars may come and go, but this difference in fundamental economic philosophy has been a mainstay of the clash between the Republican and Democratic parties for decades. Obama explained in the debate that he thinks the plumber of a few years ago, who was doing less well financially, deserved the tax break more than the plumber of next year, who will be doing better — he thinks that the financially better-off should “share the wealth”. McCain counters that a requirement to “share the wealth” will discourage growth.
Saying that McCain’s plan is better for economic growth has generally been the conservative reaction — one commentator says, “If that distinction were to permeate the consciousness of the US electorate with real force and clarity, McCain would win the election.” Well, that’s where I vehemently disagree; this difference in economic philosophy is a place where reasonable people can and do have different opinions (as evidenced by the fact that both parties continue to have a quorum of supporters!).
Obama’s plan isn’t “anti-growth” — in fact, it’s “pro-growth”, just in a different part of the economy. Obama and the Democratic Party want to encourage growth in the lower-income tax brackets. Most individuals and most small businesses make well under the $250,000 threshold that determines whose tax plan would make you pay more — and those businesses can benefit from a tax break that allows them to expand and hire people NOW, not later when they have more money. If your business is taking in that much, great! Mine isn’t — and neither are most other small businesses. McCain’s plan will help larger business owners who can already afford to hire new workers and grow their business. Obama’s tax plan will help small business owners like me to pay less in taxes and thus have more resources to grow our businesses, create jobs, and stimulate the economy at the level where ordinary Americans live.
