A new report from the Center for American Progress examines presidential candidate John McCain's tax plan and finds that it costs even more than the Bush tax cuts and is even more regressive. The report assumes the extension of the Bush tax cuts, which McCain has promised to champion despite his opposition in years past. It also assumes that the Alternative Minimum Tax (AMT) will continue to be "patched," meaning most middle-income families will be exempt from it.
The report focuses on the additional components of McCain's plan: reducing the nominal corporate tax rate from 35 percent to 25 percent, allowing investments in equipment and technology to be deducted immediately (expensed), and eliminating the AMT (which would benefit those who aren't already exempted from it by the patch).
These changes are projected to cost over $2 trillion over ten years -- and that's not including the extension of the Bush tax cuts and the AMT patch that the authors assume. And that's not even counting the additional interest on the national debt that will result, since there is almost no way that these tax cuts would be anything other than deficit-financed. The authors find that 58 percent of the benefits of these tax breaks would go to the richest one percent of Americans, that they would increase the gap between how the government taxes income from wealth compared to income from work, and that immediate expensing and the low corporate tax rate would create vast new opportunities for tax sheltering.
As bad as all this is, perhaps the most alarming finding is that this plan seems to fit nicely with the goals of anti-tax radical Grover Norquist to create a consumption tax on the sly. Norquist has already spelled out several steps that would indirectly lead to a consumption tax -- like eliminating the estate tax, eliminating taxes on capital gains and dividends and interest, abolishing the corporate tax, and flattening tax rates, which Bush has partially accomplished. McCain would further these goals along.
John McCain's views on taxes are either extremely mysterious or just totally unprincipled. As we have discussed before at length, he swung from a conservative position in the 1980s and 1990s to opposing tax cuts for the rich in the early part of George W. Bush's administration and now has swung back to the right with a plan that his own advisers admit would cause the deficit to grow.