McCain Seizes on Obama’s Tax Plan Tweak

By Julia Hoppock

Oct 23, 2008 1:00pm

ABC News’ Teddy Davis, Bret Hovell and Julia Hoppock Report: John McCain is seizing on an ABC News report about Barack Obama tweaking his tax plan to argue that his Democratic opponent will "say anything to get elected." 

"This week we learned that Senator Obama is concerned that his plan of wealth redistribution is seen as welfare," McCain said Thursday morning in Ormond Beach, Florida. "So he just added a work requirement. Twelve days to go, thirteen days to go in this election he changed his tax plan because the American people have learned the truth about it and they didn’t like it."

McCain’s latest criticism of Obama refers to comments made Tuesday by Obama adviser Austan Goolsbee at the Council on Foreign Relations. The University of Chicago professor said that the Obama campaign changed a minor component of its tax plan to avoid criticism that it was tantamount to welfare. He made his comments while debating Douglas Holtz-Eakin, McCain’s top policy adviser.

While Obama did tweak his tax plan, McCain is overlooking that the only aspect of the Obama plan that changed was the universal mortgage credit.  Obama’s other refundable tax credits were already work-related including his make-work-pay credit, saver’s credit, child-care credit, and college credit.

In his new line of attack, McCain overstates the degree to which Obama’s tax plan was altered. The work requirement articulated by Goolsbee on Tuesday might end up excluding fewer than 1,000 otherwise eligible Americans from claiming Obama’s universal mortgage credit, according to an Obama campaign estimate.

The minimal impact is because the work requirement could be met simply by having worked in the last taxable year or by having a spouse who works.

While Obama’s campaign could legitimately complain that McCain is overstating the degree to which the Democratic tax plan changed, the Obama campaign decided to put out a statement which overlooks what its own economic adviser told the Council on Foreign Relations on Tuesday.

"All of Senator Obama’s tax credits only go to workers and they always have," the Obama campaign said in a statement e-mailed to reporters. 

The truth is that when Obama originally outlined his refundable tax credits — the vast majority of them went only to workers.

But there was one refundable tax credit — the universal mortgage credit — which did not have an explicit work requirement on it which meant that it was theoretically possible for a very small number of Americans to get a check from the government under an Obama proposal even though they were not working.

"They started saying this was welfare," Goolsbee told the Council on Foreign Relations.  "So, just so they would absolutely not be able to say that, we decided that for the last two percent we’ll simply add a work requirement."

"When did this change? I’m just curious," an incredulous Holtz-Eakin asked Goolsbee.

"About two weeks ago," replied Goolsbee, adding that when the proposal was announced in September 2007, 98 percent of its benefits went to workers.

Watch it HERE.

After speaking to the Council on Foreign Relations on Tuesday, Goolsbee argued in an interview with ABCNEWS.com that he was not referring to a policy change but rather a change in what the Obama campaign decided it needed to make explicit. Goolsbee said the Obama campaign always assumed that every American would know that any new refundable tax credit would be tied to work because the refundable tax credits in current law are work related.

The purpose of Obama’s 10 percent universal mortgage credit is to aid taxpayers who do not itemize when filing taxes. The Obama campaign estimates that it would provide an average of $500 to 10 million homeowners, the majority of whom earn less than $50,000 per year.

While McCain has hammered Obama’s refundable tax credits as constituting welfare, the Republican nominee has proposed a refundable tax credit to help Americans pay for health insurance which does not have a work requirement — it would benefit all Americans regardless of whether they are working or not.

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