Obama Outmaneuvers McCain on Taxes

By Arnab Datta

Oct 28, 2008 9:26pm

ABC News’ Teddy Davis, Rigel Anderson, and Arnab Datta Report: With one week to go until Election Day, the McCain campaign finds itself in an uncomfortable position on taxes.

According to the latest polling by ABC News, Obama currently maintains a ten-point lead over McCain on an issue which Republicans typically own. 

The last Democratic candidate for president to have that kind of lead was Bill Clinton in 1992.

As George Stephanopoulos noted on the Tuesday edition of “World News with Charles Gibson,” “When Democrats win on taxes, they tend to win elections.” 

So how did Obama get the upper hand?

For starters, he went beyond the targeted tax cut approach of Democrats Al Gore and John Kerry and hammered home the message that his plan would cut taxes for “95 percent of Americans.”

The key to this promise is his sweeping proposal to offer a rebate for payroll taxes of $500 for individuals and $1,000 for couples which starts to phase out for couples at $150,000 or for non-joint filers at $75,000 per year.

Second, he promised individuals making less than $200,000 and couples making less than $250,000 that they will not see their taxes go up.

Third, when McCain and RNC began pounding Obama for backing a budget blueprint which envisioned higher taxes on Americans making as little as $42,000 per year, the Obama campaign circulated reports by FactCheck.org saying: “No taxes were increased, and the vote that the McCain campaign refers to could not by itself have resulted increase on anybody.”

And finally, Obama had the good fortune of running against a GOP opponent who could be portrayed as favoring a new broad-based tax on the middle class.

Non-partisan experts say that the refundable heath-care tax credit proposed by McCain would (at least initially) result in a lower tax bill for most Americans. 

Obama understood, however, that voters are more attuned to what they stand to lose than what they stand to gain. With that in mind, Obama ran a series of ads which eviscerated McCain for wanting to end the income tax deduction for employer-provided health care.

All four of these points have helped Obama gain the upper hand in the debate over taxes.

He even looks good relative to McCain on the issue of the deficit: according to the non-partisan Tax Policy Center, over a ten-year period, McCain’s tax policies would lead to $1.6 trillion more in debt than Obama.

(Obama’s tax policies would add $3.5 trillion to the debt; McCain’s tax policies would add $5.1 trillion to the debt over ten years).

While Obama appears to have outmaneuvered McCain on taxes, some of the Illinois Democrat’s own backers are wondering if he will face a situation similar to Bill Clinton in 1992. The newly elected Democratic president found it difficult to keep his promise to cut middle class taxes, boost public investment, and cut the deficit at the same time.

Harvard Prof. John White, an Obama supporter who wrote Perot’s ’92 balanced budget plan and later endorsed Clinton, thinks the Democratic nominee is going to have trouble cutting taxes and increasing public investment once the government is done bailing out the banking and auto industries.

“He is going to be told that the deficit is too high,” White told ABC News. “I think he is in a real box.”

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