Transcript: Obama and Clinton Debate

One of the centerpieces of my economic plan would be to say that we are going to offset the payroll tax, the most regressive of our taxes, so that families who are earning -- who are middle-income, individuals making $75,000 a year or less, that they would get a tax break so that families would see up to a thousand dollars' worth of relief.

Senior citizens who have earnings of less than $50,000 wouldn't have to pay income tax on their Social Security. And middle-class homeowners who currently don't itemize on their tax filings, they would be able to get a deduction the same way that wealthy individuals do.

Now, here's the reason why that's important. We have seen wages and incomes flat or declining at a time when costs have gone up. And one of the things that we've learned from George Bush's economic policies, which John McCain now wants to follow, is that pain trickles up.

And so, partly because people have been strapped and have had a tough time making ends meet, we're now seeing a deteriorating housing market. That also is a consequence of the lack of oversight and regulation of these banks and financial institutions that gave loans that they shouldn't have. And part of it has to do with the fact that you had $185 million by mortgage lenders spent on lobbyists and special interests who were writing these laws.

So the rules in Washington -- the tax code has been written on behalf of the well-connected. Our trade laws have -- the same thing has happened. And part of how we're going to be able to deliver on middle-class tax relief is to change how business is done in Washington, and that's been a central focus of our campaign.

GIBSON: Senator Obama, you both have now just taken this pledge on people under $250,000 -- and 200-and-what? $250,000?

OBAMA: Well, it depends on how you calculate it, but it would be between $200,000 and $250,000.

GIBSON: All right. You have, however, said you would favor an increase in the capital gains tax. As a matter of fact, you said on CNBC, and I quote, "I certainly would not go above what existed under Bill Clinton," which was 28 percent. It's now 15 percent. That's almost a doubling, if you went to 28 percent.

But actually, Bill Clinton, in 1997, signed legislation that dropped the capital gains tax to 20 percent.

OBAMA: Right.

GIBSON: And George Bush has taken it down to 15 percent.

OBAMA: Right.

GIBSON: And in each instance, when the rate dropped, revenues from the tax increased; the government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down.

So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?

OBAMA: Well, Charlie, what I've said is that I would look at raising the capital gains tax for purposes of fairness.

We saw an article today which showed that the top 50 hedge fund managers made $29 billion last year -- $29 billion for 50 individuals. And part of what has happened is that those who are able to work the stock market and amass huge fortunes on capital gains are paying a lower tax rate than their secretaries. That's not fair.

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