It looks more and more like Joe the Plumber was on to something about taxes, though you wouldn’t know if from most of the polls and media. The Heritage Foundation has the details in our new study: If a President McCain got his way on tax reform, Americans could expect to see jobs, the economy and their own disposable income grow much faster than if a President Obama were to push through his proposals.
As this chart shows, the economy would grow by $320 billion more in 10 years under John McCain’s tax plan than under Barack Obama’s, adjusted for inflation. More than twice as many jobs would be created by the McCain plan — 3.43 million, compared with 1.58 million under the Obama plan.
Both plans would reduce federal taxes, the study by Heritage’s Center for Data Analysis found. But McCain proposes $300 million more in tax reductions over 10 years. And he would advance good tax policy by emphasizing lower rates, while Obama would raise tax rates for individuals or businesses earning more than $250,000 a year.
“Senator Obama believes the current tax system is not progressive enough and that higher taxes on the ‘rich’ should be used to give money to low-income individuals or those who do not work at all,” Heritage analysts William W. Beach, Karen Campbell, Rea S. Hederman Jr. and Guinevere Nell write in their summary.
“Jobs respond more to McCain’s plan than to Obama’s,” they conclude, citing calculations using a computer-based analytical tool, Global Insight’s U.S. Macroeconomic Model. “Total employment grows an average of 915,800 jobs under Obama, 2.13 million under McCain. Both plans encourage job creation each year, but McCain’s leads to significantly larger growth — and sooner.”
Some more evidence: A family of four would enjoy an average of $3,631 more in disposable income under Obama, but $5,138 more under McCain.
McCain puts more emphasis on creating jobs and raising wages, Heritage fiscal policy analyst JD Foster writes at HumanEvents.com. In addition to extending all the 2001 and 2003 reductions in tax rates, McCain pledges to cut the corporate tax rate from 35 percent — second highest in the industrialized world — to 25 percent.
By contrast, as Foster also argues in a related paper, the Obama plan would impede business investment by raising rates on capital gains and dividends. While increasing taxes on higher earners, Obama would cut taxes for — or give money to — those who already pay little or no income tax. How would Obama do this? By increasing the tax credit for child and dependent care, and making it refundable; creating a refundable “make work pay” credit for low-wage workers; and expanding the earned-income credit.
Obama’s tax proposals exemplify his view that redistributing income among citizens is more important than increasing their earnings and creating jobs.”