McCain’s numbers still don’t add up

[one...two...tree 2,762]

When it comes to taxes, John McCain wants to make Bush's cuts permanent, and slash the corporate income-tax rate from 35% to 25%. In all, according to the McCain campaign and the Congressional Budget Office, McCain's plan would cost an additional $400 billion a year (at a time of already huge budget deficits), and at the same time, the senator is also vowing to balance the federal budget by the end of his first term.

Robert Gordon and Advisor James Kvaal, both of the Center for American Progress, explained a few days ago that McCain's plan costs more than $2 trillion, prompting former CBO Director Douglas Holtz-Eakin, a top McCain aide, to acknowledge that McCain's plan "will make deficits expand up front," but over the long term, the deficits will shrink again because his policies promote growth. "That place has to be economically viable, otherwise they have a problem," Holtz-Eakin said.

It prompted Gordon and Kvaal to ask four good questions.

1) Why is it necessary to cuts taxes for corporations to make them "economically viable" when the United States already has the fourth-lowest corporate tax revenue as a share of the economy in the industrialized world?

2) Why are deficit-financed corporate tax cuts likely to increase growth when (a) in the short-run, Moody's Economy.com ranked them the least cost-effective stimulus among 13 options, and

in the medium or longer-run, the effect on growth of deficit-financed tax cuts "tends to be small?"

3) How do massive tax cuts for the most fortunate further shared prosperity when income inequality is at its highest level since before the Great Depression (or earlier)?

4) Given the admission that this plan will immediately increase federal budget deficits, how will Senator McCain meet his own goal of balancing the budget by 2012?

McCain has acknowledged that he doesn't understand economics, so I don't imagine he'll be able to answer these questions. Either way, the fact that McCain's numbers don't add up should matter quite a bit.

http://www.thecarpetbaggerreport.com/

[mawilson 2,133]

1) Why is it necessary to cuts taxes for corporations to make them "economically viable" when the United States already has the fourth-lowest corporate tax revenue as a share of the economy in the industrialized world?

To make sure the United States is #1 and not the "fourth lowest"?

2) Why are deficit-financed corporate tax cuts likely to increase growth when (a) in the short-run, Moody's Economy.com ranked them the least cost-effective stimulus among 13 options, and in the medium or longer-run, the effect on growth of deficit-financed tax cuts "tends to be small?"

Least effective? I doubt that.

3) How do massive tax cuts for the most fortunate further shared prosperity when income inequality is at its highest level since before the Great Depression (or earlier)?

A lot of that money will get passed on to the employees.

4) Given the admission that this plan will immediately increase federal budget deficits, how will Senator McCain meet his own goal of balancing the budget by 2012?

Good question.

[GaryC 7]

Yet another misleading hit piece from the Carpetbagger.

Lower taxes have been proven to stimulate the economy and in the end INCREASE the federal intake of taxes. The more money a person has as the result of lower taxes means more money spent in our economy. More money spent means more people working to supply the added demand.

Lower corporate taxes means the companies have more money to expand and employ more people. Even though the tax rate is lower the higher base means more money coming in.

On the other hand, higher personal and corporate taxes tend to slow down the economy and put people out of work. Even though the tax rate is higher the end result is less money coming into the government. The natural reaction of the liberals is to further increase taxes to make up the shortfall and the vicious cycle continues.

Tax cuts work and this is a real strong reason why Clinton or Obama in the white house would be a bad thing for our country.

[one...two...tree 2,762]

3) How do massive tax cuts for the most fortunate further shared prosperity when income inequality is at its highest level since before the Great Depression (or earlier)?

A lot of that money will get passed on to the employees.

Then why is the income differential at an all time high? That's a bit of denial and one big reason the failed economic policies of the Republican Party means the Democrats are a shoe-in for the White House.

Myth #8: Business Corporations Favor a Policy of Laissez-Faire

Never in the history of our country have corporations, Wall Street financiers, bond holders, and other large capitalists, as a class or interest, favored a policy of economic liberty and nonintervention by government. They have always favored some form of mercantilism. It is surely significant that the second Republican Party, founded in Michigan in 1854, was funded and led by men who wished to overthrow the libertarian desideratum of the 1840s and 50s. Of course there have been exceptions.

...

And always, such gentlemen proclaimed their devotion to free enterprise and their opposition to arbitrary intervention into our economic life by the state. Except, of course, for their own case, which was always unique and which was justified by their immense concern for the public interest.

Just look at any of the major corporations (Exxon/Mobil) and see how much the government has intervened on their behalf.

http://www.mises.org/story/1568