Fiscal system : risking it all on a tax break
03 November 2008 à 11h28
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One more time, the question of taxes is in the middle of the electoral debate. But for once, Democrats and Republicans do agree on the principle of lowering taxes. A global understanding, that cannot eclipse huge differences in the point of view related to the terms of implementation.
The fiscal record has been for decades the eternal bone of contention between republicans and democrats. A classic of its kind, which has given the opportunity to Friedman and Keynes ‘s followers to cross swords during epic TV debates.
The 2008 US elections –without totally upsetting the rules of the game– has sensibly changed the deal. For once, both candidates to the supreme chair agree on the delicate theme that fiscal record remains. One same goal: lowering taxes.
This common will showed off by candidates has two main justifications. On the one hand, they try to pursue a reduction in taxes movement started in 2001. On the other hand, Obama and McCain cannot do without a taking into consideration the financial crisis factor. The Paulson plan, whose funding is due to taxpayer mobilization, compels White House candidates to bring the tax reduction card into play in other respects.
For McCain, the program is simple : reduction for everybody. Lowering of the tax rate on company’s profits of 10%, lessening of the death duties, or abolition of the obligation to pay a minimum tax for the middle and working classes are one of the main measures considered by the Senator of Arizona. These social classes are also in the heart of the democratic candidate’s concerns. They represent an important electoral stake which Obama foresees to grant a fiscal reduction of 80 billion dollars a year. In the same way, the Senator of Illinois would like to grant a tax reduction to job-creating companies.
Nevertheless, the candidates don’t totally share the same opinion as regards the fiscal system. Those who will most profit by a fiscal easing won’t be the same depending on whether one or the other candidate wins. In that view, Obama and McCain remain the holders of the financial orthodoxy of their camp. Symbol of that opposition : the tax reductions granted by the Bush administration to the families earning more than 250,000 dollars a year. The Senator from Arizona wants to perpetuate them, the one from Illinois intends to abolish them.
The 147,000 richest families of the country also separate both candidates. McCain is ready to grant them a tax reduction of 4.4%, whereas Obama wishes them to be up 11.5%. Add his project of rise in the income tax, and you’ll better understand why the Senator from Illinois' fiscal plan is an easy target for the Republicans. And even if Obama has affirmed, during his second debate with McCain, that thanks to his project " 95% of American people will pay less taxes ", he lays himself open to criticism.
In spite of the confidence displayed by the two White House candidates in their fiscal projects, none of them knows exactly in which degree their propositions will be applicable. The Financial crisis is more threatening than ever. No one can predict what will be the real room to manœuvre of the future president as regards fiscal policy. Tomorrow, no more taxes? Not that sure.
The fiscal record has been for decades the eternal bone of contention between republicans and democrats. A classic of its kind, which has given the opportunity to Friedman and Keynes ‘s followers to cross swords during epic TV debates.
The 2008 US elections –without totally upsetting the rules of the game– has sensibly changed the deal. For once, both candidates to the supreme chair agree on the delicate theme that fiscal record remains. One same goal: lowering taxes.
This common will showed off by candidates has two main justifications. On the one hand, they try to pursue a reduction in taxes movement started in 2001. On the other hand, Obama and McCain cannot do without a taking into consideration the financial crisis factor. The Paulson plan, whose funding is due to taxpayer mobilization, compels White House candidates to bring the tax reduction card into play in other respects.
The middle class in the heart of the concern
For McCain, the program is simple : reduction for everybody. Lowering of the tax rate on company’s profits of 10%, lessening of the death duties, or abolition of the obligation to pay a minimum tax for the middle and working classes are one of the main measures considered by the Senator of Arizona. These social classes are also in the heart of the democratic candidate’s concerns. They represent an important electoral stake which Obama foresees to grant a fiscal reduction of 80 billion dollars a year. In the same way, the Senator of Illinois would like to grant a tax reduction to job-creating companies.
Nevertheless, the candidates don’t totally share the same opinion as regards the fiscal system. Those who will most profit by a fiscal easing won’t be the same depending on whether one or the other candidate wins. In that view, Obama and McCain remain the holders of the financial orthodoxy of their camp. Symbol of that opposition : the tax reductions granted by the Bush administration to the families earning more than 250,000 dollars a year. The Senator from Arizona wants to perpetuate them, the one from Illinois intends to abolish them.
" 95% of American people will pay less taxes "
The 147,000 richest families of the country also separate both candidates. McCain is ready to grant them a tax reduction of 4.4%, whereas Obama wishes them to be up 11.5%. Add his project of rise in the income tax, and you’ll better understand why the Senator from Illinois' fiscal plan is an easy target for the Republicans. And even if Obama has affirmed, during his second debate with McCain, that thanks to his project " 95% of American people will pay less taxes ", he lays himself open to criticism.
In spite of the confidence displayed by the two White House candidates in their fiscal projects, none of them knows exactly in which degree their propositions will be applicable. The Financial crisis is more threatening than ever. No one can predict what will be the real room to manœuvre of the future president as regards fiscal policy. Tomorrow, no more taxes? Not that sure.
