John McCain's and Barack Obama's tax proposals would add trillions of dollars to the national debt, according to an authoritative analysis released Wednesday.
McCain would cut taxes by a total of $4.2 trillion over 10 years, largely by extending most of President Bush's temporary tax reductions, which are set to expire in 2010, according to the analysis by the Tax Policy Center, a nonpartisan operation of the Urban Institute and the Brookings Institution, two center-left Washington research centers.
With interest costs, McCain's plans would add $5 trillion to the debt over 10 years, the center concluded.
Obama would cut taxes by a total of $2.8 trillion over that period by extending some of Bush's tax reductions and creating new ones for the working and middle classes. That figure includes the extra $284 billion the government would collect over 10 years under Obama's proposals to raise taxes on those who make more than $250,000 annually.
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With interest, Obama's plans would increase the debt by an estimated $3.4 trillion.
The debt now stands at $9.5 trillion, or $31,284.84 for every person in the United States, according to the National Debt Clock Web site. The debt was $5.6 trillion in 2000. Simply paying interest will cost taxpayers about $260 billion this year, more than three times what the nation will spend on veterans, for example.
The study breaks down who would benefit from the candidates' tax cuts and who'd pay more taxes.
The campaigns disputed the findings in a sometimes-heated exchange Wednesday at the Tax Policy Center.
Austan Goolsbee, the senior policy adviser to Obama's campaign, said the report wrongly made it look as though the two candidates were similar in both proposing big increases in the national debt. He said that Obama would reduce annual budget deficits and the national debt, but he wouldn't specify how that would happen.
Doug Holtz-Eakin, the senior policy adviser to the McCain campaign, countered that McCain would be able to eliminate the annual deficit by 2013 because his tax cuts would create more jobs and stir economic growth. But the Tax Policy Center study said that McCain's budget deficits would offset the economic stimulus effects of his policies.
Here's McCain's plan:
The middle 20 percent of income earners – those who make $38,000 to $66,000 annually – would get average cuts of $1,400 by 2012. McCain would make permanent such temporary Bush tax cuts as the child tax credit, the elimination of the so-called “marriage penalty” and lower income-tax rates.
The wealthiest 1 percent – those who make more than $603,000 a year – would get the largest reductions, averaging $127,000.
Those with large enough estates to pay the estate tax would pay higher taxes under McCain. He would reinstate the estate tax, which has been eliminated temporarily under the Bush policy.
Oil and gas companies also would pay more, as McCain would eliminate some tax loopholes.
Here's Obama's plan:
Middle-income families would get average tax reductions of $2,100. Obama would extend the Bush tax cuts that went to middle-income families and add new tax credits for college and the working poor.
The top 1 percent would get tax increases, averaging $38,000.
Investors would pay higher capital-gains taxes. Gains that aren't taxed now would be taxed at 8 or 10 percent, and those now taxed at 15 percent would be taxed at 18 or 20 percent.