John McCain on Tax Reform
Republican nominee for President; Senior Senator (AZ)
"To raise taxes on anybody in America today, with the tough economic times we're in, is foolishness," McCain said.
OBAMA: I want to provide a tax cut for 95% of Americans. The vast majority of small businesses would get a tax cut under my plan.
Previously, McCain said Obama voted 94 times to increase taxes, which is way off. He’s now saying it’s 94 votes either for increased taxes or against tax cuts. But that’s still misleading. 18 of the votes were for lowering taxes for most people while increasing them on a few.
McCAIN: Obama didn’t mention that along with his tax cuts he is also proposing some $800 billion in new spending on new programs. That’s the fundamental difference between myself and Obama. I want to cut spending. I want to keep taxes low. The worst thing we could do in this economic climate is to raise people’s taxes.
McCain was badly wrong in what he said about the child “tax credit.” The current child tax credit is $1,000, and McCain is not proposing any increase at all. What McCain actually is proposing is a gradual increase in the $3,500 exemption for each dependent child, starting in 2010 and increasing $500 each year until it reaches $7,000 in 2016. The distinction between a tax credit and a tax exemption is both basic and significant. A tax credit is a dollar-for-dollar reduction in the amount of tax owed. An exemption is much less valuable to taxpayers, as it merely reduces the amount of income subject to tax. An exemption is also more valuable to upper-income taxpayers, who fall into higher tax brackets, than to middle- and lower-income taxpayers.
It is a terrible mistake to raise taxes during an economic downturn. Increasing the tax burden on Americans impedes job growth, discourages innovation and makes us less competitive. Small businesses are the biggest job creators in our economy. Keeping individual tax rates low isn’t intended as a favor to wealthy Americans. Most small business owners pay those rates, and taking more money from them deprives them of the capital they need to invest and grow and hire. The first consideration we should have when debating tax policy is how we can help those companies grow and increase the prosperity of the millions of American families whose economic security depends on their success.
A: Yes. I think the worst thing we can do right now--we’ve got some shaky economic times--is to increase people’s taxes. And I think that what we need is more tax cuts. We need to make Bush tax cuts permanent. We need to get rid of the AMT. We need to cut corporate taxes. We need to give people reasons to write off and depreciation their business investments and equipment investments.
A: I mentioned it many, many times. And I had a tax cut package of my own which also included restraints in spending.
Q: But in 2001, you voted for a tax cut that was targeted more at the middle class, and you voted against the tax cut when it tilted more toward the wealthy. Don’t you sound a little bit like Obama or Clinton on that?
A: I don’t think so. Back in 1984, when I first came to the Congress as a foot soldier in the Reagan revolution, I was one of those who fought hard for tax cuts, and we were able to get them. And after that we had one of the greatest periods of economic prosperity in history.
It is true that McCain voted in 2006 to make the Bush tax cuts permanent. But he was against the cuts before he was for them, and his statements in the debate dismiss that fact. McCain voted against both sets of Bush tax cuts, in 2001 and in 2003. And on NBC’s “Meet the Press” in 2004, McCain stated that he did not support extending all the cuts, though he did go on to say that he would make the so-called “middle class” tax cuts permanent.
McCain is entitled to change his mind. And in fact, his opinions are not necessarily contradictory; he may believe that the tax cuts he opposed should now be made permanent so that taxpayers know what to expect. But his statements in the debate could lead voters to believe that he has always supported the cuts, and that’s simply not true
A: I’m sure those people that had to pay it did.
McCAIN: When I first came to Congress, we were in the middle of the Reagan revolution, and I was proud to be a foot soldier in that revolution. And we cut taxes. But we cut spending. And Ronald Reagan insisted that we cut spending, because he knew that it was vital, if we were going to keep the deficit down and not have the fiscal difficulties we have today, we had to cut spending. I’m proud to have supported those tax cuts. And I believe that if we had done what I wanted to do--cut taxes and, at the same time, cut spending--we’d be talking about more tax cuts today. But we let spending get out of control. Unfortunately, we betrayed one of the principles of the Republican Party. I’m in favor of tax cuts. We’ll do them. But we’ll cut spending when I’m president.
A: I do not, and I think we should look very carefully at it. Obviously, we need a simpler, fairer tax code. If Congress can’t fix the tax code, give me the job and I’ll fix it.
A: Everybody’s paying taxes, and wealth creates wealth. A vibrant economy creates wealth. Revenues are at an all-time high.
Q: So you’re saying the system is fair?
A: Sure it’s fair. The bulk of the taxes are paid by wealthy people. Should we reform our tax code? Absolutely we should fix our tax code, and we should fix it immediately.
A: Because I stand on my record. And my record is 24 years of opposing tax increases. And I opposed them & I’ll continue to oppose them. But my proposal in 2000 & 2001 was not just to cut taxes but to stop spending. We allowed spending to get out of control to the point where it bred corruption. I pledge to the American people, I will veto every pork barrel bill that comes across my desk. And I will make the authors of those pork barrel projects famous.
Q: Why not, if you are determined to not raise taxes, why not sign the pledge?
A: Because there’s no point. I stand on my record. I don’t have to sign pledges. We had automatic restraints in spending included in my tax-cut package, [but we Republicans] let spending get out of control and preside over the largest increase in the size of government since the Great Society.
A: I believe that we’ve got to simplify the tax code. But one of the first areas we’ve got to go after is the alternate minimum tax, which is going to eat in to 20 million American families if we don’t eliminate it, and very quickly. Look, when we found out that Congress could not close a single military base when we had a huge number of them, we appointed a commission and they said we would close so many bases, and Congress votes up or down. I would find [someone like former Federal Reserve Chairman] Alan Greenspan. I’d say, “Give us your recommendations.” We’ll pass a law, and we will vote on Alan Greenspan and his commission’s recommendations, yes or no, up or down. That’s the way you’re going to simplify the tax code, which now requires $140 billion of American families’ income to prepare their tax returns.
McCain’s campaign said that the senator was drawing his figures from a 2005 report by the President’s Advisory Panel on Federal Tax Reform. The panel cited a total compliance cost of $140 billion. But that figure wasn’t just for “families,” it included individual and business taxes. The cost attributed to individuals was $65 billion. And even that figure is not an estimate for the amount of “American families’ income” spent to prepare taxes, but assigned a dollar value to preparation time. The IRS calculates time burden separately from cash outlay. For 2000, it puts the latter at $19 billion, a fraction of the figure McCain used.
McCain would have been correct to say that it is estimated that American families spend more than $20 billion of their income on preparing tax returns, plus hours of their valuable time.
In 2004, I again asked you about opposing the Bush tax cuts, and you said, “I voted against the tax cuts because of the disproportional amount that went to the wealthiest Americans. I would clearly support not extending those tax cuts in order to help address the deficit.“ But now you voted to extend them.
A: I voted to extend them because it would have the effect of having a tax increase. The tax cuts have increased revenues enormously. They’ve been very beneficial. The problem is that spending has lurched completely out of control. My proposal was to restrain spending. I do not support tax increases. And the effect of not making them permanent would have the effect of a tax increase.
A: Because in the proposal that I had, there were significant tax cuts. And the thing that bothered me was that there was no provision to start addressing a contingency. We had a contingency called the Iraq war. And we had no restraint on spending. Yes, these tax cuts needs to be made permanent. Otherwise they will have the effect of a tax increase. But spending is destroying the future of this country.
A: The alternative minimum tax is obviously eating Americans alive, and it’s got to be repealed. Another one I think is important is a $3,000 tax credit for people to be able to purchase health insurance. So low-income Americans will have access to health care, which is an amazing and difficult problem today. And a simpler, flatter, fair tax so that Americans don’t have to spend $140 billion to prepare their tax returns.
A: No, because it would have the effect of a tax increase, and I don’t support tax increases. The fact is that in 2000 I had a proposal that restrained spending. I voted against those tax cuts because there was no restraint of spending, and spending lurched out of control completely.
Q: President McCain, no new taxes?
A: Of course not. I’ve never supported tax increases. I don’t support them now.
Q: And that’s a pledge that you would make over your four years?
A: I don’t take pledges. The fact is my record is very clear of opposition to tax increases. I oppose tax increases. I don’t take pledges.
McCain then warned that if the final bill lowered the top rate any further from the Senate number of 36%, at the expense of the middle class, he would vote against the final bill; when it came back with a top rate of 35%, he did so. It was a bold thing to vote against the president’s highest priority, and some of McCain’s staff worried about the consequences for his standing within his party, but he decided to stick to his own beliefs.
Under the plan, the ceiling for the 15% bracket would rise to $70,000 from $43,050 for married couples filing jointly, and to $35,000 from $25,750 for single taxpayers. The effect is to give a $3,504 tax cut to a couple with taxable income of $70,000 or more.
“I want a balanced approach,” McCain says. “I put a whole lot of money into Social Security, Medicaid, and paying down the debt [and less] money into tax cuts.”
According to McCain’s plan, people who give charitable contributions in the form of stock, real estate, bonds, or artwork could no longer take a tax deduction for the current, appreciated value of the gift. Instead, the donor could take a deduction only for the original cost of the asset. The McCain campaign describes this as closing a loophole for the very rich, while the Bush campaign says it would kill off incentives for giving.
“Wealthy Americans shouldn’t get a tax write-off for contributing a fancy painting or an overvalued stock,” said McCain’s spokesman. “Bush is protecting his wealthy donor base at the expense of the middle class.” By eliminating the deduction, the spokesman said, 25,000 additional working-class people would get a tax cut.
His tax plan largely tracks a proposal he made last summer. New details include a proposal to pay for much of his tax cut by closing $150 billion worth of specific corporate tax loopholes over the next 5 years. Under McCain’s plan, the ceiling for the 15% tax bracket would rise to $70,000 for couples filing jointly and to $35,000 for single people. Its primary benefits would therefore go to people currently in the 28% tax bracket, couples earning over $43,050 and single people earning over $25,750
BUSH: In human terms, [a couple earning] $42,000 a year in income, under [McCain’s] plan, will receive a $200 tax cut. Under the plan that I proposed, they receive an $1,852 tax cut. The fundamental difference is that the additional $1,600 will go to Washington under your idea. And under my idea it goes into people’s pockets. There is enough money to take care of Social Security. There’s enough money to meet the basic needs of our government and there is enough money to give the American people a substantial tax cut.
MCCAIN: I want to thank you for your efforts on behalf of a flat tax. I think we’ve got to eliminate the marriage penalty, the earnings test, raise the 15% tax bracket, put a level of $5 million on the inheritance tax. But this tax code is 44,000 pages long. It’s an abomination. It’s a cornucopia of good deals for the special interests and it’s a nightmare for American citizens. We’ve got to get rid of the special interest loopholes that are right in this tax code. That’s the first step in cleaning it up to reach your goal of a simplified tax system. I appreciate your efforts. But until the day arrives when we remove the influence of the special interests, we’re not going to be able to achieve your goal.
McCain was one of two Republican senators to vote against the Bush tax cuts of 2001, saying that he could not support a tax cut that went to rich Americans rather than middle class Americans. He now favors making the tax cuts permanent.
A: I also said that the major reason why I was opposed to it was because there was no spending cuts. Reagan had tax cuts, but we had spending cuts that went right along with it.
Q: But you voted the third time for the tax cuts, but there weren’t spending cuts.
A: No, but I thought that we ought to keep the tax cuts permanent, because if I had voted in the other way, that would have had the effect of increasing taxes.
Q: Do you believe that voting against the Bush tax cuts was a mistake?
A: Of course not.
Q: Bob Novak wrote in his column, “McCain has admitted to me that those tax votes were a mistake.”
A: I can’t account for Bob Novak’s comments or anybody else’s comments
A: I didn’t say that I was wrong. I said that the reason why I opposed those tax cuts was because we didn’t rein in spending. And the fact is the tax cuts have dramatically increased revenues. If we don’t make them permanent, then every business, farm and family in America will have to adjust their budgets to what is in effect a tax increase.
In 2001, I proposed massive tax cuts, but I also proposed to rein in spending. Spending is out of control. We didn’t lose the 2006 election because of the war in Iraq; we lost it because we in the Republican Party came to Washington to change government and government changed us. We let spending go out of control. We spent money like a drunken sailor, although I never knew a sailor drunk or sober with the imagination of my colleagues.
SUPPORTER'S ARGUMENT FOR VOTING YES:Sen. GRASSLEY: The Senate voted to make sure that middle-class America didn't pay the AMT, and we did it without an offset, by a vote of [about 95%]. So here we are again with an opportunity to say to middle-class America that we are not going to tax the people who were not supposed to be hit by the AMT. This amendment gives us an opportunity to get over that hurdle that is in this budget resolution that, under pay-go, you would have to have an offset for the AMT. Unless my amendment is adopted, the 25 million families who will be hit by the AMT increase will get a tax increase of over $2,000 apiece. They deserve a guarantee of relief.OPPONENT'S ARGUMENT FOR VOTING NO: Sen. CONRAD: If you want to blow a hole in the budget as big as all outdoors, here is your opportunity--a trillion dollars not paid for, a trillion dollars that we are going to go out and borrow from the Chinese and Japanese. That makes absolutely no sense. I urge my colleagues to vote no.LEGISLATIVE OUTCOME:Amendment rejected, 47-51
SUPPORTER'S ARGUMENT FOR VOTING YES:Sen. KYL: This amendment is a reprise of what we did last year in offering to reform the estate tax, sometimes referred to as the death tax. Now, in the budget itself, there is a provision to allow the death tax to be changed from the current law to a top rate of 45% and an exempted amount of $3.5 million, and there are some other features. My amendment would reduce that top rate to no higher than 35% so that if you had more than one rate, at least the top rate could not exceed 35%, and both of the two spouses would have a $5 million exempted amount before the estate tax would kick in. Now, the reason for my amendment is: current law [is] getting up to a high rate of 55% and an exempted amount of either $2 million or $1 million, probably $1 million--a continued unfair burden on primarily America's small businesses and farms.
OPPONENT'S ARGUMENT FOR VOTING NO:Sen. CONRAD: This amendment would virtually eliminate the estate tax. Let me say why. Let me first say there is no death tax in the country. Of course, if you poll people and you ask them: Do you want to eliminate the death tax? they will say sure. But you are not going to pay any tax when you die unless you have $2 million. There is no death tax in America. There is a tax on estates. At today's level of $2 million, that affects only 0.5% of estates. When the exemption reaches $3.5 million in 2009, 0.2% of estates will be taxed. If the amendment is agreed to, we would be borrowing money in the name of 99.8% of the American people, borrowing primarily from China & Japan, to give it to the Warren Buffets, the Paris Hiltons, & others of enormous wealth in this country.
LEGISLATIVE OUTCOME:Amendment rejected, 50-50
Proponents recommend voting YES because:
This amendment repeals the AMT. Except for the telephone tax, the alternative minimum tax is the phoniest tax we have ever passed. The AMT, in 1969, was meant to hit 155 taxpayers who used legal means to avoid taxation, under the theory that everybody ought to pay some income tax.
This very year, more than 2,000 people who are very wealthy are not paying any income tax or alternative minimum income tax. So it is not even working and hitting the people it is supposed to hit. Right now, this year, 2007, the year we are in, there are 23 million families that are going to be hit by this tax. It is a phony revenue machine, over 5 years, $467 billion dollars. We are going to have to have a point of order this year to keep these 23 million taxpayers from paying this tax. We might as well do away with it right now, once and for all, and be honest about it.
Opponents recommend voting NO because:
The reality of the budget resolution is this may not have anything to do with eliminating the alternative minimum tax. The one thing it will do is reduce the revenue of the Government over the next 5 years by $533 billion, plunging us right back into deficit. Look, we can deal with the AMT. We have dealt with it in the underlying budget resolution for the next 2 years. There will be no increase in the number of people affected by the AMT for the next 2 years under the budget resolution, and that is paid for. Unfortunately, this amendment is not paid for. It would plunge us back into deficit. I urge my colleagues to vote no.
Proponents recommend voting YES because:
It is disappointing to many family businesses and farm owners to set the death tax rate at what I believe is a confiscatory 45% and set the exemption at only $3.5 million, which most of us believe is too low. This leaves more than 22,000 families subject to the estate tax each year.
Opponents recommend voting NO because:
You can extend all the tax breaks that have been described in this amendment if you pay for them. The problem with the amendment is that over $70 billion is not paid for. It goes on the deficit, which will drive the budget right out of balance. We will be going right back into the deficit ditch. Let us resist this amendment. People could support it if it was paid for, but it is not. However well intended the amendment is, it spends $72.5 billion with no offset. This amendment blows the budget. This amendment takes us from a balance in 2012 right back into deficit. My colleagues can extend those tax cuts if they pay for them, if they offset them. This amendment does not pay for them; it does not offset them; it takes us back into deficit. It ought to be defeated.
Proponents recommend voting YES because:
The permanent solution to the death tax challenge that we have today is a compromise. It is a compromise that prevents the death rate from escalating to 55% and the exclusion dropping to $1 million in 2011. It also includes a minimum wage increase, 40% over the next 3 years. Voting YES is a vote for that permanent death tax relief. Voting YES is for that extension of tax relief. Voting YES is for that 40% minimum wage increase. This gives us the opportunity to address an issue that will affect the typical American family, farmers, & small business owners.
Opponents recommend voting NO because:
Family businesses and family farms should not be broken up to pay taxes. With the booming economy of the 1990s, many more Americans joined the ranks of those who could face estate taxes. Raising the exemption level and lowering the rate in past legislation made sense. Under current law, in my State of Delaware, fewer than 50 families will face any estate tax in 2009. I oppose this legislation's complete repeal of the estate tax because it will cost us $750 billion. Given the world we live in today, with clear domestic needs unmet, full repeal is a luxury that we cannot afford.
To add insult to this injury, the first pay raise for minimum wage workers in 10 years is now hostage to this estate tax cut. We are told that to get those folks on minimum wage a raise, we have to go into debt, so that the sons and daughters of the 7,000 most fortunate families among us will be spared the estate tax. We must say no to this transparent gimmick.
Every year National Taxpayers Union (NTU) rates U.S. Representatives and Senators on their actual votes—every vote that significantly affects taxes, spending, debt, and regulatory burdens on consumers and taxpayers. NTU assigned weights to the votes, reflecting the importance of each vote’s effect. NTU has no partisan axe to grind. All Members of Congress are treated the same regardless of political affiliation. Our only constituency is the overburdened American taxpayer. Grades are given impartially, based on the Taxpayer Score. The Taxpayer Score measures the strength of support for reducing spending and regulation and opposing higher taxes. In general, a higher score is better because it means a Member of Congress voted to lessen or limit the burden on taxpayers. The Taxpayer Score can range between zero and 100. We do not expect anyone to score a 100, nor has any legislator ever scored a perfect 100 in the multi-year history of the comprehensive NTU scoring system. A high score does not mean that the Member of Congress was opposed to all spending or all programs. High-scoring Members have indicated that they would vote for many programs if the amount of spending were lower. A Member who wants to increase spending on some programs can achieve a high score if he or she votes for offsetting cuts in other programs. A zero score would indicate that the Member of Congress approved every spending proposal and opposed every pro-taxpayer reform.
OnTheIssues.org interprets the 2005-2006 CTJ scores as follows:
Citizens for Tax Justice, founded in 1979, is not-for-profit public interest research and advocacy organization focusing on federal, state and local tax policies and their impact upon our nation. CTJ's mission is to give ordinary people a greater voice in the development of tax laws. Against the armies of special interest lobbyists for corporations and the wealthy, CTJ fights for:
Politicians often run for office saying they won't raise taxes, but then quickly turn their backs on the taxpayer. The idea of the Pledge is simple enough: Make them put their no-new-taxes rhetoric in writing.
In the Taxpayer Protection Pledge, candidates and incumbents solemnly bind themselves to oppose any and all tax increases. While ATR has the role of promoting and monitoring the Pledge, the Taxpayer Protection Pledge is actually made to a candidate's constituents, who are entitled to know where candidates stand before sending them to the capitol. Since the Pledge is a prerequisite for many voters, it is considered binding as long as an individual holds the office for which he or she signed the Pledge.
Since its rollout with the endorsement of President Reagan in 1986, the pledge has become de rigeur for Republicans seeking office, and is a necessity for Democrats running in Republican districts.
[The ATR, Americans for Tax Reform, run by conservative lobbyist Grover Norquist, ask legislators to sign the Taxpayer Protection Pledge in each election cycle. Their self-description:]
In the Taxpayer Protection Pledge, candidates and incumbents solemnly bind themselves to oppose any and all tax increases. Since its rollout in 1986, the pledge has become de rigeur for Republicans seeking office, and is a necessity for Democrats running in Republican districts. Today the Taxpayer Protection Pledge is offered to every candidate for state office and to all incumbents. More than 1,100 state officeholders, from state representative to governor, have signed the Pledge.
The Taxpayer Protection Pledge: "I pledge to the taxpayers of my district and to the American people that I will: ONE, oppose any and all efforts to increase the marginal income tax rate for individuals and business; and TWO, oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates."
Opponents' Opinion (from wikipedia.com):In Nov. 2011, Sen. Harry Reid (D-NV) claimed that Congressional Republicans "are being led like puppets by Grover Norquist. They're giving speeches that we should compromise on our deficit, but never do they compromise on Grover Norquist. He is their leader." Since Norquist's pledge binds signatories to opposing deficit reduction agreements that include any element of increased tax revenue, some Republican deficit hawks now retired from office have stated that Norquist has become an obstacle to deficit reduction. Former Republican Senator Alan Simpson, co-chairman of the National Commission on Fiscal Responsibility and Reform, has been particularly critical, describing Norquist's position as "no taxes, under any situation, even if your country goes to hell."
Not only has the Republican-led Congress achieved a balanced budget for the first time since 1969, but it has also created a budget surplus -- a feat not previously even imaginable. It is currently projected that the Fiscal Year 1999 budget surplus will be along the order of some $80 billion, of which $66 billion is earmarked for Social Security. This envious state of affairs would seem to indicate that equitable, far-reaching tax reductions may be in order -- not as an ideological or political strategy, but as a primary element of an economic growth policy and a legitimate tool for holding down unnecessary government growth in times of surplus.
The United States is enjoying steady economic prosperity thanks in no small measure to prudent fiscal policies implemented by the Republican-led Congress. However, we must look not only at the positive side of the economy but also at the problems the economy faces -- at the present time and into the twenty-first century. Limiting government spending (i.e., spending caps) is a good beginning to address some difficulties. In addition, current and future Congresses should maintain a balanced federal budget, pay down the national debt (which will help protect Social Security for current and future generations), redefine the federal government's role in the society and, finally, think about fair tax reductions for the American people and the businesses that drive our economy. [We need] an evaluation of implementing tax cuts based on their social fairness.
|Other candidates on Tax Reform:||John McCain on other issues:|
Retiring in 2014 election:
Retired as of Jan. 2013:
Senate Retirements 2014:
Senate races Nov. 2014:
AK: Begich(D) vs.Miller(R) vs.Treadwell(R) vs.Sullivan(R)
AR: Pryor(D) vs.Cotton(R) vs.Swaney(G) vs.LaFrance(L)
CO: Udall(D) vs.Gardner(R) vs.
DE: Coons(D) vs.Wade(R)
GA: Nunn(D) vs.Perdue(R) vs.Swafford(L) vs.
HI: Schatz(D) vs.
IA: Braley(D) vs.Ernst(R) vs.Butzier(L) vs.
ID: Risch(R) vs.Mitchell(D)
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MA: Markey(D) vs.Herr(R) vs.Skarin(I) vs.
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NH: Shaheen(D) vs.Brown(R) vs.Smith(R) vs.Rubens(R) vs.Testerman(R) vs.Martin(R)
NJ: Booker(D) vs.Bell(R) vs.
NM: Udall(D) vs.Weh(R) vs.Clements(R)
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OK-6: Inhofe(R) vs.Silverstein(D)
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RI: Reed(D) vs.Zaccaria(R)
SC-2: Scott(R) vs.Dickerson(D) vs.
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