A Tax Professor's View on VP Debate

[_Trevor]

The following article can be found at http://taxprof.typepad.com/taxprof_blog/2008/10/tax-gaffes-in-l.html.

Tax Gaffes in Last Night's Biden-Palin VP Debate

FactCheck.org and the Tax Foundation's Tax Policy Blog detail the tax gaffes in last night's Vice-Presidential debate between Joe Biden and Sarah Palin. From FactCheck.org:

* Palin repeated a false claim that Obama once voted in favor of higher taxes on “families” making as little as $42,000 a year. He did not. The budget bill in question called for an increase only on singles making that amount, but a family of four would not have been affected unless they made at least $90,000 a year.
* Biden wrongly claimed that McCain “voted the exact same way” as Obama on the budget bill that contained an increase on singles making as little as $42,000 a year. McCain voted against it. Biden was referring to an amendment that didn't address taxes at that income level.
* Palin claimed McCain’s health care plan would be “budget neutral,” costing the government nothing. Independent budget experts estimate McCain's plan would cost tens of billions each year, though details are too fuzzy to allow for exact estimates.
* Palin wrongly claimed that “millions of small businesses” would see tax increases under Obama’s tax proposals. At most, several hundred thousand business owners would see increases.

See the detailed discussion below the fold:

Palin's False Tax Claims

Palin repeated a false claim about Barack Obama's tax proposal:

Palin: Barack Obama even supported increasing taxes as late as last year for those families making only $42,000 a year. That's a lot of middle income average American families to increase taxes on them. I think that is the way to kill jobs and to continue to harm our economy.

Obama did not in fact vote to increase taxes on "families" making as little as $42,000 per year. What Obama actually voted for was a budget resolution that called for returning the 25 percent tax bracket to its pre-Bush tax cut level of 28 percent. That could have affected an individual with no children making as little as $42,000. But a couple would have had to earn $83,000 to be affected and a family of four at least $90,000. The resolution would not have raised taxes on its own, without additional legislation, and, as we've noted before, there is no such tax increase in Obama's tax plan. (The vote took place on March 14 of this year, not last year as Palin said.)

Palin also repeated the exaggeration that Obama voted 94 times to increase taxes. That number includes seven votes that would have lowered taxes for many, while raising them on corporations or affluent individuals; 23 votes that were against tax cuts; and 17 that came on just 7 different bills. She also claimed that Biden and Obama voted for "the largest tax increase in history." Palin is referring here to the Democrats' 2008 budget proposal, which would indeed have resulted in about $217 billion in higher taxes over two years. That's a significant increase. But measured as a percentage of the nation's economic output, or gross domestic product, the yardstick that most economists prefer, the 2008 budget proposal would have been the third-largest since 1968, and it's not even in the top 10 since 1940.

Biden's False Defense

Biden denied that Obama supported increasing taxes for families making $42,000 a year – but then falsely claimed that McCain had cast an identical vote.

Biden: Barack Obama did not vote to raise taxes. The vote she's referring to, John McCain voted the exact same way. It was a budget procedural vote. John McCain voted the same way. It did not raise taxes.

Biden was correct only to the extent that the resolution Obama supported would not by itself have increased taxes; it was a vote on a budget resolution that set revenue and spending targets. But he's wrong to say McCain voted the same way. The Obama campaign attempted to justify Biden's remark by pointing to a different vote, on a Senate amendment, that took place March 13. The amendment passed 99-1, with only Democratic Sen. Russ Feingold dissenting. It would have preserved some of Bush's tax cuts for lower-income people. The vote on the budget resolution in question, however, came in the wee hours of March 14 and was a mostly party-line tally, 51-44, with Obama in favor and McCain not voting.

Palin's Health Care Hooey

Palin claimed that McCain's health care plan would be "budget-neutral," costing the government nothing.

Palin: He's proposing a $5,000 tax credit for families so that they can get out there and they can purchase their own health care coverage. That's a smart thing to do. That's budget neutral. That doesn't cost the government anything ... a $5,000 health care credit through our income tax, that's budget neutral.

The McCain campaign hasn't released an estimate of how much the plan would cost, but independent experts contradict Palin's claim of a cost-free program.

The Urban-Brookings Tax Policy Center estimates that McCain's plan, which at its peak would cover 5 million of the uninsured, would increase the deficit by $1.3 trillion over 10 years. Obama's plan, which would cover 34 million of the uninsured, would cost $1.6 trillion over that time period.

The nonpartisan U.S. Budget Watch's fiscal voter guide estimates that McCain's tax credit would increase the deficit by somewhere between $288 billion to $364 billion by the year 2013, and that making employer health benefits taxable would bring in between $201 billion to $274 billion in revenue. That nets out to a shortfall of somewhere between $14 billion to $163 billion – for that year alone.

Palin also said that Obama’s plan would be "universal government run" health care and that health care would be "taken over by the feds." That's not the case at all. As we’ve said before, Obama’s plan would not replace or remove private insurance, or require people to enroll in a public plan. It would increase the offerings of publicly funded health care.

Palin's Small Business Balderdash

Palin repeated a falsehood that the McCain campaign has peddled, off and on, for some time:

Palin: But when you talk about Barack's plan to tax increase affecting only those making $250,000 a year or more, you're forgetting millions of small businesses that are going to fit into that category. So they're going to be the ones paying higher taxes thus resulting in fewer jobs being created and less productivity.

As we reported June 23, it's simply untrue that "millions" of small business owners will pay higher federal income taxes under Obama's proposal. According to an analysis by the independent Urban-Brookings Tax Policy Center, several hundred thousand small business owners, at most, would have incomes high enough to be affected by the higher rates on income, capital gains and dividends that Obama proposes. That counts as "small business owners" even those who merely have some sideline income from such endeavors as freelance writing, speaking or running rental properties, and who get the bulk of their income from employment elsewhere.

[_dartagnan]

Palin repeated a false claim that Obama once voted in favor of higher taxes on “families” making as little as $42,000 a year. He did not. The budget bill in question called for an increase only on singles making that amount, but a family of four would not have been affected unless they made at least $90,000 a year.

Sounds pretty definitive. But Politifact said this was "barely true." http://www.politifact.com/truth-o-meter/statements/742/

Besides, this tax guy went to a University in Cincinnati. Who is he to correct someone like Biden who went to Harvard?

Oh wait, he doesn't correct Biden!

Amazing how most fact check sites provide roughly a 50/50 list of both Biden and Palin misstatements, yet this guy can only fault Biden for a "false defense" on one issue. And Palin's "hooey" and her "balderdash" hardly suggests objectivity. But that's pretty much the kind of slanted material I'd expect you to read.

[_Trevor]

Sounds pretty definitive. But Politifact said this was "barely true." http://www.politifact.com/truth-o-meter/statements/742/

Barely true? LOL. You call that a refutation? Please.

Besides, this tax guy went to a University in Cincinnati. Who is he to correct someone like Biden who went to Harvard?

Actually, nimrod, the man teaches at Cincinnati, where he is the Associate Dean of Faculty. He got his JD from Cornell and obtained his LLM from Boston. The WSJ calls his tax blog a "must-read blog."

Amazing how most fact check sites provide roughly a 50/50 list of both Biden and Palin misstatements, yet this guy can only fault Biden for a "false defense" on one issue.

Tax Prof is not a "fact check" site. It is considered the top tax blog among tax academics.

And Palin's "hooey" and her "balderdash" hardly suggests objectivity. But that's pretty much the kind of slanted material I'd expect you to read.

Sure, Kevin. Your assumptions have an a priori factual truth to them. Tax Prof is not a liberal pundit's blog, your opinion of this article notwithstanding.

[_dartagnan]

He got his JD from Cornell and obtained his LLM from Boston.

Well, that certainly explains your adoration towards him. You probably didn't even have to look that information up.

[_Analytics]

Sounds pretty definitive. But Politifact said this was "barely true."
Sure, Kevin. Your assumptions have an a priori factual truth to them. Tax Prof is not a liberal pundit's blog, your opinion of this article notwithstanding.

Are you sure? College professors are notoriously liberal.

[_Trevor]

Are you sure? College professors are notoriously liberal.

Of law professors, tax law professors are generally reputed to be less liberal than the average. They are more concerned with what might work in taxation vs. ideological positions. There are plenty of areas of law academics where this is not the case. Tax law happens to be an exception, partly because it is a den of uber-geeks.

[_Trevor]

Well, that certainly explains your adoration towards him. You probably didn't even have to look that information up.

Yeah, I suppose his professional reputation has nothing to do with why I would take his blog seriously. Keep selling crap, Kev.

I will add that at least I showed evidence of being able to read correctly, whereas you read him as graduating from Cincinnati. Good job.

[_Analytics]

Are you sure? College professors are notoriously liberal.

Of law professors, tax law professors are generally reputed to be less liberal than the average. They are more concerned with what might work in taxation vs. ideological positions. There are plenty of areas of law academics where this is not the case. Tax law happens to be an exception, partly because it is a den of uber-geeks.

It would seem that even tax lawyers would prefer Democrats, given that they presumably are too smart to buy into Laffer-Curve-voodoo economics and the like.

[_Trevor]

It would seem that even tax lawyers would prefer Democrats, given that they presumably are too smart to buy into Laffer-Curve-voodoo economics and the like.

On the issue of taxation itself, they are more likely than not to disagree with such ideas as the gospel of tax cuts to the wealthy and corporations resulting in more jobs. From my recollection, the ones I know treat that as an unproven. I think you are right that many of them do not buy into trickle-down economics. On the other hand, I think as a general rule that you will find most of them tend to be into the mechanics of tax instead of the ideology of tax. I am not saying that there aren't wacky conservatives and wacky liberals out there, because there are. What I have heard, however, is a surprising degree of willingness to be realistic. There are other areas of law academics that are much more ideologically driven.