THE BASIS POINT

WSJ: Will Obama Really Cut Taxes for 95% of People?

WSJ Obama Tax AnalysisThis graph was in the WSJ Opinion page today along with an article questioning the Obama tax proposal. Interesting, but consider the conservative source:

One of Barack Obama’s most potent campaign claims is that he’ll cut taxes for no less than 95% of “working families.” He’s even promising to cut taxes enough that the government’s tax share of GDP will be no more than 18.2% — which is lower than it is today. It’s a clever pitch, because it lets him pose as a middle-class tax cutter while disguising that he’s also proposing one of the largest tax increases ever on the other 5%. But how does he conjure this miracle, especially since more than a third of all Americans already pay no income taxes at all?

For the Obama Democrats, a tax cut is no longer letting you keep more of what you earn. In their lexicon, a tax cut includes tens of billions of dollars in government handouts that are disguised by the phrase “tax credit.” Mr. Obama is proposing to create or expand no fewer than seven such credits for individuals:

– A $500 tax credit ($1,000 a couple) to “make work pay” that phases out at income of $75,000 for individuals and $150,000 per couple.

– A $4,000 tax credit for college tuition.

– A 10% mortgage interest tax credit (on top of the existing mortgage interest deduction and other housing subsidies).

– A “savings” tax credit of 50% up to $1,000.

– An expansion of the earned-income tax credit that would allow single workers to receive as much as $555 a year, up from $175 now, and give these workers up to $1,110 if they are paying child support.

– A child care credit of 50% up to $6,000 of expenses a year.

– A “clean car” tax credit of up to $7,000 on the purchase of certain vehicles.

The article ends by wondering why McCain has allowed Obama’s proposal to go unanswered. Perhaps because McCain cannot communicate his own vision?