12:20 p.m. “Tax Policy at a Crossroads” is the 3rd panel today at the Humphrey Institute’s series of forums entitled, America’s Future: Conversations about Politics and Policy during the 2008 Republican National Convention. The discussion is moderated by Howard Gleckman (Senior Research Associate, Urban Institute). The panelists are:
* Leonard Burman (Director, Urban – Brookings Tax Policy Center)
* Austan Goolsbee (Robert P. Gwinn Professor of Economics, University of Chicago Graduate School of Business and Senior Policy Advisor to Senator Barack Obama)
* John Taylor (Professor of Economics at Stanford University, Economic Advisor to Senator John McCain)
* Joel Slemrod (Paul W. McCracken Collegiate Professor of Business Economics and Public Policy, Stephen M. Ross School of Business, University of Michigan and Director of the Office of Tax Policy Research)
12:29 p.m. Taylor states McCain does not want to raise taxes on anyone if elected president. McCain’s tax play is ‘focused on health care’ and would provide a $5,000 tax credit to all Americans, including those who are not employed.
12:39 p.m. Goolsbee faults President Bush for trillions of dollars of unfunded tax cuts and thus increased budget deficits. Goolsbee links McCain’s tax plan with the Bush plan – adding billions of dollars per year to the budget deficit. On Obama’s side, he states Obama will reduce taxes for 95 percent of Americans.
12:44 p.m. Goolsbee says 2/3 of Obama’s tax plan goes to people making less than $65,000 per year, and under McCain’s plan it is just 6 percent and therefore “following the Bush playbook” and not benefiting “ordinary Americans.”
12:45 p.m. Goolsbee is coming out much more on the attack against McCain than Taylor did against Obama.
12:48 p.m. Slemrod states both tax plans would retain most of the Bush tax cuts, but that McCain would collect about $100 billion less per year. McCain also emphasizes business tax cuts and on capital income. Obama would raise more revenues on high income individuals, as in the Clinton era. Obama would collect substantially less from middle-income taxpayers. Slemrod says there is no sign of fundamental tax reform under either plan.
12:52 p.m. Slemrod adds there is no sign either policy will address the long-term fiscal imbalance between the promises the U.S government has made in Social Security and Medicare.
12:54 p.m. Slemrod suggests one rough way to compare the McCain and Obama tax plans is to (imperfectly) compare the Clinton and Bush years.
12:57 p.m. Burman says a major change to the income tax system is going to come soon out of necessity in this country. Action will be forced due to, for example, all of President Bush’s tax cuts will expire by 2010, in addition to the unprecented demands that will be placed on the federal government by the retirement of baby boomers.
1:01 p.m. Burman criticizes the two candidates for running health policy changes (e.g. credits) through the tax system. Burman says we need to 1) pay for government and end deficit spending, 2) not rely so heavily on the income tax for our tax system, and instead adopting, for example, value-added taxes, and 3) simply the tax system so it gains more support and does not seem so unfair by seeming to benefit the wealthy, who find loopholes.
1:13 p.m. After Taylor accused Obama of having a tax increases, Goolsbee vehemently disagreed and said Obama’s plan has a ‘net tax cut.’ Taylor quipped that is a ‘not tax cut.’
1:15 p.m. Goolsbee takes a shot at McCain’s tax plan as a “trickle down” policy.
1:21 p.m. When asked how he would pay for the tax cuts, Goolsbee does not initially give specifics (he does not say from where cuts in spending would come). When pressed he lists: a responsible drawdown in the War in Iraq, ending direct subsidies to high-income farmers and student loan providers, reducing earmarks back to 1994 levels, and ending no-bid contracts.
1:26 p.m. For his part, Taylor relies on an increased revenue stream from economic growth and cutting the growth of spending, rather than listing particular budget cuts. He also wishes to end agricultural subsidies (like ethanol) and earmarks.