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Friday, April 25, 2008

WSJ: McCain and Taxes

Wall Street Journal editorial, McCain and Taxes:

John McCain, the Republican nominee for President, has proposed extending the Bush tax cuts. So as morning follows night this week, Democratic news analysis has been pouring forth to proclaim that his tax ideas are a threat to the republic because they'll explode the budget deficit. The Senator needs to understand that he can't win this election by playing on this economic turf.

The subtext of the criticism of the McCain tax plan is that it would somehow "starve" the government of revenue. ...

If all the tax cuts expire, however, we would see the largest tax increase in U.S. history and that percentage of national income going to the Treasury would climb steeply higher. In which economics text is it written that the cure for a slowing economy is an unprecedented tax increase? ...

The past week's criticisms are intended to bait Mr. McCain into debating his tax cuts on these liberal terms. He can only win this debate, and the election, by breaking free of that mindset and making his own personal case for lower taxes and the prosperity they help to create.

Update:  For a contrary view, see Citizens for Tax Justice:  McCain's Transformation Complete: Tax Cuts for the Rich, Even if We Cannot Pay for Them.

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Comments

Posted by Daniel N Erasmus of www.dnerasmus.com

With tax cuts proposed and the USA economy not looking so healthy, and with a massive trade deficit, where do the tax cut dollars come from? More debt? Has debt become the new currency?

With in excess of $300bn making up the tax gap as reported by the Department of Treasury, if the IRS were able to target this missing tax more effectively, the USA debt position may end up looking far more healthy, with more tax cut opportunities.

In addition to this, if the results of the Corporate co-operation pilot program between 74 corporates and the IRS were made available and more widely known, more corporations may be encouraged to pursue a closer relationship with the IRS in exchange for certainty that they will not undergo surprise field audits.

Many are also not aware that a similar process of co-operation was discussed seriously by the OECD Tax Forum member states earlier in 2008 in Cape Town, South Africa, encouraging more co-operation between taxpayers and the Revenue Services of member states around the world.

A carefully orchestrated strategy for tax risk management becomes essential calling for more proactive participation by taxpayers and their advisors. Its time for the Tigers of the corporate world to act like Tigers and not ostriches with their heads in the sand, pretending not to notice their historical tax risks.

Posted by: Daniel N Erasmus | Apr 25, 2008 1:22:26 PM