WASHINGTON, D.C. — How would Barack Obama pay for the $800 billion that John McCain claimed in the first presidential debate Sept. 26 in Oxford, Miss., that his Democratic opponent would spend if he were elected president? Obama replied, by "closing tax loopholes."
Obama was no more specific in the debate, and tax experts doubt that structural changes without increasing taxes can raise anything close to that amount of money.
My office asked the Obama campaign for the details, and it responded with a 19-page single-spaced paper on the candidate’s "tax plans."
In fact, there was precious little about tax policy in the paper, which amounted to a repeat of Democratic campaign oratory that can be heard in 30-second speeches before both houses of Congress daily on C-SPAN.
Obama has made clear that he would try to roll back President Bush’s tax cuts, but that does not come under the definition of a "loophole." A loophole consists of a conniving tax attorney discovering a weakness in the Internal Revenue Code or such a weakness intentionally legislated by Congress under the instigation of crafty lobbyists. The only specific tax legislation contained in Obama’s paper would raise the capital gains rate for most shareholders, restore taxation on dividend income to pre-Bush standards and restore the full estate tax.
These were not loopholes but presidential proposals enacted by Congress. The Obama paper paints a picture of lobbyists running wild on Capitol Hill but neglects to assess the impact on the economy during the current financial crisis of taking a serious strike against the stockholding public.
Obama’s dividends and capital gains proposals appear to be a major attempt at redistribution of income rather than a serious attempt to pay for the spending that he has proposed.