With his latest ad, John McCain committed a double-fraud in 30 seconds. In a spot featuring ersatz plumber and best friend for this week Joe Wurzelbacher, McCain called Barack Obama's tax plan for working families "welfare." As his duplicitous spot reveals, John McCain apparently knows very little about payroll taxes. And as it turns out, the self-proclaimed "foot soldier in the Reagan revolution" knows even less about the earned income tax credit (EITC), hailed by the Gipper himself as "the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress."
Predictably regurgitating the bogus Republican talking point proliferated by the Wall Street Journal, the Washington Times, Townhall and mouthpieces of the right, McCain claimed that Barack Obama wants to give tax cuts as welfare to the undeserving:
Leading papers call Obama's taxes "welfare"..."government handouts".
Obama raises taxes on seniors, hard working families to give "welfare" to those who pay none. Just as you suspected, Obama's not truthful on taxes.
Of course, McCain and his acolytes are willfully wrong.
For starters, as Salon, the Washington Monthly and the New Republic among others quickly pointed out, McCain and his allies are conveniently ignoring the payroll taxes for Social Security and Medicare. Starting with the first dollar they earn, American workers pay the 6.2% Social Security tax (on income up to $97,000) and another 1.45% for Medicare. An analysis by the nonpartisan Tax Policy Center concluded, "three quarters of filers pay more in payroll taxes than in income taxes." And as Robert Gordon and James Kvaal noted at TNR:
"It is true that Obama has proposed several tax credits that include families who earn too little to owe income taxes, a group that include about half of families with children. But many of these families work and pay thousands of dollars in other taxes. For example, a family of four must earn about $25,000 before owing income taxes--but they must pay payroll taxes on the first dollar they earn. Indeed, Obama's biggest refundable credit is designed to cushion the blow of payroll taxes."
Which brings us to the second part of McCain's fraudulent charge. That millions of hard working American families pay no income taxes is due in large measure to the Earned Income Tax Credit. Created in 1975, the EITC "a refundable federal income tax credit for low-income working individuals and families" that results in a tax refund to those who claim and qualify for the credit when the EITC exceeds the amount of taxes owed. As the Center for Budget and Policy Priorities detailed in 2005, the EITC has not only been extremely successful in reducing poverty, it has enjoyed broad bipartisan support:
The Earned Income Tax Credit has been found to produce substantial increases in employment and reductions in welfare receipt among single parents, as well as large decreases in poverty. Research indicates that families use the EITC to pay for necessities, repair homes and vehicles that are needed to commute to work, and in some cases, to help boost their employability and earning power by obtaining additional education or training.
The EITC has enjoyed substantial bipartisan support. President Reagan, President George H. W. Bush, and President Clinton all praised it and proposed expansions in it, and economists across the political spectrum - including conservative economists Gary Becker (a Nobel laureate) and Robert Barro, among others - have lauded it.
Not all conservatives, of course, have been so receptive to the notion of encouraging work. As the New Republic reminded voters, McCain and his right-wing water carriers are just channeling decades-old animus in perpetuating this bogus stereotype:
But McCain is echoing Phil Gramm's and Newt Gingrich's old claim here that tax credits for low-income workers amount to welfare. The Wall Street Journal editorial page charmingly referred to people too poor to pay income taxes as "lucky duckies."
Despite the Wall Street Journal's best myth-making, Barack Obama's proposed tax credits - for college tuition, for day care, extra mortgage interest, for savings, for fuel efficient cars, etc. – in no way resemble George McGovern's proposed $1,000 grants in 1972. And to be sure, the Journal and John McCain alike are misleading voters with the demonstrably false claim about Obama's tax credits that "they are an income transfer -- a federal check -- from taxpayers to nontaxpayers."
So much for straight talk.