Former New York mayor Rudy Giuliani proposed new tax cuts last week that go beyond making permanent the Bush tax cuts (which in itself would cost $5 trillion over ten years). Giuliani proposes to also cut the capital gains rate from its current level of 15 percent down to 10 percent, and to cut the corporate tax rate from 35 percent to 25 percent.
CTJ published a paper this past summer showing that the current tax subsidy for capital gains and dividends cost $92 billion in 2005 alone, and nearly three quarters of that went to the richest 0.6 percent of taxpayers. This regressive tax break would become more costly under Giuliani's proposal.
Another CTJ paper from last year found that U.S. corporate taxes as a percentage of GDP are already among the lowest in the developed world, meaning American corporations are not unduly burdened, or made less competitive than those in other countries, by our corporate tax.
McCain would create a permanent credit for research and development. CTJ has criticized the current research credit which, we've noted, has a peculiar following among lawmakers who usually argue that the free market works without government interference. McCain also proposes first-year deduction or "expensing" of "equipment and technology investments." Accelerated depreciation and expensing have in the past been a cause of tax sheltering and distortions in the economy. They can result in certain investments becoming more profitable after-tax than before-tax.