The John McCain campaign released its latest TV ad today, a straightforward negative (or comparative) spot called “Taxman”. When McCain hasn’t hit at Obama’s celebrity since the World Tour, he’s hammered him on tax and spending policies, and this follows in both veins:
Celebrity? Yes. Ready to lead? No. Obama’s new taxes could break your family budget. The press warns the “taxman cometh”.
Obama’s taxes mean “higher prices at the pump”. Obama’s taxes a “recipe for economic disaster”.
Higher taxes. Higher gas prices. Economic disaster. That’s the real Obama.
How worried has Obama become on this front? Worried enough to flip-flop on taxes, or at least serve a healthy dish of waffles. James Pethokoukis noted this yesterday at US News:
This is a pretty big change for Obamanomics. Economic advisers Austan Goolsbee and Jason Furman, in today’s Wall Street Journal, now say that Barack Obama’s tax plan will do the following:
1) It will increase capital gains and dividend tax rates, to 20 percent, only for families making over $250,000. Before, Obama was hinting at rates as high as 28 percent for everyone.
2) On the issue of the Social Security income cap, he’s now considering a plan that would make folks earning over $250,000 pay in the range of 2 to 4 percentage points more in total (combined employer and employee) payroll taxes. Previously, there were hints at increases of from 6 percent to 12 percentage points.
Pethokoukis thinks this change is both smart and dumb, the latter for opening Obama to charges of flip-flopping again. It looks more like a waffle, but the real effect is to undermine any certainty at all about Obama’s intentions on tax policy. Will he stick to his word now, or go back to his original plans once in office? I don’t know, and neither does anyone else now.
Further, the capital-gains policy is still dumb. Yes, Obama gets a few points for relieving the middle class of a hike in the rate, but the cap-gains tax rate is supposed to encourage large-scale investment. Jobs get created when people risk large amounts of money, and hiking the cap-gains rate will discourage that regardless, especially when Obama plans to use it to punish the larger investors.
McCain needs to explain that Obama is indulging in class warfare, a common tactic of the Left. Pethokoukis says McCain will have a hard time defending a low cap-gains tax rate for the wealthy, but McCain shouldn’t even allow that meme into his rhetoric. He needs to explain what Obama doesn’t know — that capital investment carries large risks, and the best way to encourage risk-taking on the scale that creates jobs is to ensure that tax policy favors it. We realize more revenue in the short and long run from a robust economy than we do with class-warfare tax policies.
McCain has a good start with “Taxman”. He needs to focus on Obama’s tactics in his next spot.