Scrutinizing McCain's Tax Plan
February 9, 2000
Sen. John McCain's (R-Ariz.) impressive victory in the New Hampshire primary and even more impressive lead in the South Carolina polls has many policy analysts scrambling to learn more about his platform, in particular his tax proposals.
Sen. McCain's tax cut proposal, released Jan. 11, was deliberately designed to be smaller than Gov. George W. Bush's (R-Texas) proposal, and to be tilted more toward those with lower incomes.
It would raise the ceiling for the 15 percent federal income tax bracket from $25,750 to $35,000 for individuals, and from $43,050 to $70,000 for couples. Only those in that narrow income range would benefit from the adjustment. Bush's plan would lower marginal tax rates for all taxpayers.
- McCain's plan proposes to permanently ban taxation of Internet purchases, which Bush has been reluctant to endorse.
- He would also create new tax-deferred savings vehicles for families and expand existing ones.
- And he would eliminate the Social Security earnings test, raise the estate tax exemption to $5 million, expand medical savings accounts and reform the alternative minimum tax.
McCain also supports the flat tax and private accounts in which workers could invest up to 20 percent of their Social Security taxes.
The flat tax works especially well with McCain's avowed desire to eliminate corporate welfare, since all loopholes would be eliminated in one fell swoop. Bush, on the other hand, has not put forward a plan for fundamental tax reform.
On Social Security, McCain and Bush have similar views. But if McCain emphasized private accounts, he would ease the discomfort many conservatives feel about his views on campaign finance, tobacco taxes and other areas where he seems to have taken a liberal tack.
Source: Bruce Bartlett (senior fellow, National Center for Policy Analysis), "There Is Room for McCain on the Right," Los Angeles Times, February 8, 2000.
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