McCain Cuts Taxes More, Obama Cuts More Taxes
Megan Cerpentier observes that, “despite the stereotype that my taxes should go up under a Democratic tax plan and down under a Republican, it seems that Obama’s tax plan is most likely to lower my tax bills and McCain’s plan will do little or nothing at all for me.” This, because Obama proposes giving self-employed Megan a “Making Work Pay” credit whereas the McCain tax cuts won’t help her much because she makes a relatively modest income.
Ezra Klein expands on this insight
Just as a small sliver of the population controls a massive amount of the national income, so too does the same sliver pay the lion’s share of the taxes. In recent years, their tax burden has been easing even as their incomes have been rising, but in absolute terms, the folks with the bulk of the money are still the folks paying the bulk of the taxes. Democrats often raise taxes on these folks — who are often called “the rich” — which means raising taxes on 2 percent or 5 percent or 10 percent of the population, depending on how you’re counting. But in increasing the burden of the rich, they’re often able to lower it on the poor and working class. So even as revenues go up because Bill Gates’ bracket is raised to 41 percent, the tax burden of 60 percent of the country might go down. The government takes in more money, but the median American pays less in taxes.
To recap: Under Democrats, the tiny percentage of Americans who pay almost all the taxes will pay even more so that those who pay hardly any taxes can get a tiny rebate. Under the Republicans, those who pay the most taxes get the most tax relief.
Certainly, it’s a crafty electoral model. As my colleague Dave Schuler likes to say, “When you rob Peter to pay Paul, you can always count on the support of Paul.”
One could reasonably argue, of course, that cutting taxes during wartime is bad policy, let alone when we’re borrowing massively to pay for the war. But if we’re going to reduce the tax burden, it makes sense to do so in a way that targets those actually burdened by taxes.