McCain’s Mortgage Refi Plan: Half a Good Idea
The most interesting thing I heard in last night’s debate between John McCain and Barack Obama (in fact, the only interesting thing I heard) was McCain’s call for a new federal effort to directly refinance residential mortgages into new low-interest loans. The plan got me thinking about a provocative way to pay for it—eliminate the mortgage interest deduction for these new loans.
McCain and Obama Stimulus Plans: The Good, Bad, and Ugly
Both Barack Obama and John McCain have rolled out new economic stimulus plans. Each is a hodgepodge of some good ideas, some not-so-good, and some potentially awful. Obama says his new ideas would cost $60 billion. McCain says his would cost about $52 billion.
Here is a quick look at what they have in mind:
The centerpiece of Obama’s proposal is a new refundable tax credit for companies that add domestic jobs. Businesses would get $3000 for every net new full-time worker they hire. Any business would be eligible, even those that pay no taxes.
The McCain and Obama Stimulus Plans: An Update
TPC’s Katherine Lim has crunched some numbers on John McCain’s proposal to temporarily cut capital gains tax rates from 15 percent 7.5 percent. In 2009, under a plan that lowers taxes on both gains and dividends, those making $1 million or more would get two-thirds of the benefit, and an average tax cut of more than $72,000. Those making less than $50,000 would get, on average, nothing.
Looting Your 401(k) To Fix the Economy
Talk about a bad idea. Barack Obama and John McCain both want to give people tax incentives to empty their retirement savings accounts. They’d help contribute to a disastrous old age for many middle-class seniors, even as they provide a windfall to wealthy savers.
In the name of relieving financial hardship caused by the economic slowdown, Obama would allow penalty-free withdrawals from 401(k)s, IRAs, and the like of up to $10,000 for the next two years. McCain’s plan, which is even worse, would cut the tax rate to 10 percent on up to $50,000 of withdrawals in both 2008 and 2009. Workers contribute pre-tax money into these accounts and, currently, withdrawals are taxed at rates up to 35 percent.
Refundable Tax Credits=Socialism?
John McCain says Barack Obama’s enthusiasm for refundable tax credits amounts to socialism. Wow.
This is interesting for so many reasons. To start, the mother of all refundable credits is the Earned Income Credit, which is the largest poverty program in the U.S. and distributes $42 billion to more than 20 million low-income families. It was enacted during the Presidency of well-known leftist Gerald Ford, and has been expanded repeatedly ever since, most recently by President Bush in 2001.
Share the wealth
A few more thoughts on “Barack the wealth spreader,” as Sarah Palin now describes the Democratic nominee. I’m inspired in part by commenter D.F., who wrote this morning, “Tax rebates don’t work. We need a flat tax.”
First off, John McCain is right when he says Obama’s tax plan is redistributionist, if by that he means his rival would give his biggest tax cuts to the lowest earners. TPC calculates that Obama would cut the average tax rate for the lowest 20 percent of earners by more than 5 percent while he’d raise the rate by a roughly equal amount for the top 1 percent.
The Baucus-McCain Health Reform Plan
Well, not exactly. But I wanted to get your attention.
Senate Finance Committee Chairman Max Baucus (D-Mt.) has unveiled a blueprint for major health reform. And it includes a call for scaling back the tax benefits of employer sponsored insurance. Baucus has put on the table a variation of John McCain’s plan to scrap that benefit and use the money to finance a refundable credit for anyone buying insurance (either in the individual market or though their employer). This would be the very same idea that Barack Obama so frequently ripped as a massive tax increase on your health care.
Deficit Hawk Redux: Can McCain Balance the Budget by 2013?
Unlike many bloggers, I am not going to bash John McCain’s renewed interest in balancing the budget. It is nice to see his on-and-off love affair with fiscal responsibility heating up again.
There is just one problem with his vow to balance the budget by 2013. He can’t do it. Or, to be more precise, he can’t do it while extending the Bush tax cuts, cutting other taxes of his own, and maintaining a costly military presence in Iraq.
What Would It Cost to Repeal the Corporate Income Tax?
John Endean raised an intriguing idea the other day in response to my blog on whether business executives would be willing to give up targeted tax breaks in return for a lower corporate rate, as John McCain has suggested.
Economists Grade McCain On the Curve
I turned in my PhD dissertation just in time. I can’t believe I’m going to be a doctor of public finance.
My paper: An Alternative Tax System in the McCain Administration. It is a detailed description and macroeconomic analysis of John McCain’s plan to give taxpayers a choice of paying under the current system or through a much simpler and more efficient option.