Obama Campaign Defends Its Tax Cut Plan

Yesterday, I published a critical view of Sen. Barack Obama's middle class tax relief plan, and after some good-natured ribbing by Obama aide Robert Gibbs, I've agreed to print their response in full.

McArdle: "This will be very expensive."

Obama Campaign: "The plan will cost $80m-$85m and we have a plan to pay for it."

McArdle: "Some of it is a blatant giveaway to those who don't need it; seniors already do *very* well out of the US government."

Obama Campaign: "Seniors making under $50,000 / year are struggling with higher health care as well as energy and heating costs and it is because of these trends that Barack Obama is providing them relief."

McArdle: "The tax simplification thing will not work. Most people itemize because they have to. It directly wars with his plan for a refundable mortgage credit."

Obama Campaign: "First, this simplification plan is not designed for everyone – it’s designed for 40 million low and middle income Americans with the simplest tax situations. The IRS already receives their bank account information, wage information and their mortgage interest information from financial institutions. So creating the tax credit does not make tax filing more complicated for these 40 million non-itemizers because the government gets their mortgage interest information anyways. Many other countries, such as Sweden and Denmark, already do this type of filing."

McArdle: "The refundable tax credit for working families to "rebate" their tax credits is silly; they're already rebated to the poor via the EITC. Expanding the EITC would make sense, but not this silly giveaway to the middle class."

Obama Campaign: "We simply disagree; low AND middle income folks have had stagnant wages and rising costs of living, regardless of whether they receive the EITC or not. The government should do whatever it takes to fight against the economic insecurity of the low and middle classes which is why we provide tax relief to both. Obama believes the middle class deserves a tax break."

McArdle: "The AARP may go nuts over the payroll tax refund; they hate any implication that it's a tax, not a contribution. Presumably the lowered taxes on seniors are supposed to buy their support."

Obama Campaign: "We aren’t saying anything about the payroll tax, rather that the tax code should respect and honor work. The best way to give working people a tax relief is to do it based on the payroll tax (or contribution) because every working person in American pays it. We are not changing the payroll tax – Social Security will continue to raise the same revenue every year."

McArdle: "Overall, not a good plan. There are better, more economically efficient ways to achieve what he is proposing, and there's not all that much money to be clawed back by repealing tax cuts on the over $250K set."

Obama Campaign: "First, the goal of the plan is to provide direct tax relief to workers, seniors and homeowners in a fair way that helps with economic insecurity. This plan represents direct methods of reaching each [payroll offset, seniors, mortgage credit] One of the principle components of paying for this plan and making the tax code more fair is closing tax shelters, corporate loopholes and corporate tax avoidance activities."