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Roundtable on the Candidates' Tax Plans

Roundtable on the Candidates' Tax Plans

FOX News Special Report With Brit Hume - October 21, 2008

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, (R) PRESIDENTIAL CANDIDATE: Since you can't reduce income taxes on those who pay zero, the government will write them all checks, called a tax credit, and the treasury, and the treasury will have to cover those checks by taxing other people.

SEN. BARACK OBAMA, (D) PRESIDENTIAL CANDIDATE: What he is confusing is the fact that even if you don't pay income tax--there are a lot of people who don't pay income tax--you are still paying a whole lot of other taxes.

(END VIDEO CLIP)

HUME: And, yes, some Republicans might say but we already have a program for those people. It's called an "earned income tax credit," which allows people who don't otherwise pay income taxes to get some money anyway in the form of that credit.

Some thoughts on this debate now from Mort Kondracke, Executive Editor for "Roll Call," Jeff Birnbaum, managing editor digital of "The Washington Times," and the syndicated columnist Charles Krauthammer, FOX News contributors all.

Well, we now have a debate in these final weeks triggered by a hypothetical question asked by the fabled Joe the plumber on Obama's tax plan, which led to a whole discussion of what his proposed tax cut for 95 percent of Americans would mean. Where does it stand, Mort?

MORT KONDRACKE, EXECUTIVE EDITOR, "ROLL CALL": Well, I think it's an arcane argument that is not going to ultimately decide this election.

I think the idea of whether this is a tax credit or a rebate or a extra earned income tax credit or a giveaway-

HUME: Or a handout.

KONDRACKE: Or a handout, it is not welfare because the people who get it are only those who are already employed, and it's not socialism because socialism means that the government controls the economy, which this is not.

So, you know, I think that -- I don't think it's going to decide the election.

HUME: Let me see if I can state it correctly. Under the Obama tax plan, a great many people who pay no income taxes, although they may pay other taxes, would get money from the government?

KONDRACKE: Right.

HUME: It's called a tax credit or something.

KONDRACKE: Right.

HUME: It is, in fact, however, in the form of money that is either borrowed and added to the deficit or taxed away from other taxpayers who would have additional taxes to pay. Is that a fair statement?

KONDRACKE: Yes. Look, the tax code is riddled with goodies for various groups of all kinds. Warren Buffett famously says--

HUME: How many people actually get money in their pockets outside this group who don't actually pay taxes?

KONDRACKE: It is called the refundable tax credit.

HUME: I know what it is called.

KONDRACKE: And John McCain is in favor of one in the healthcare system.

JEFF BIRNBAUM, MANAGING EDITOR DIGITAL, "THE WASHINGTON TIMES": I actually disagree, Mort. I don't disagree that this may not turn the election one way or the other, but I think if it were more clearly stated by McCain that it could have a grander effect.

I think he does have to use the word "welfare," even though technically that's not correct because the people who would receive this money are working people. but nonetheless, it has the same effect--

HUME: Wait a minute. It can't be welfare if you have a job?

BIRNBAUM: That's--technically that's the case.

But it is a handout, as you have suggested, that would be an excellent word, or "welfare."

HUME: A subsidy.

BIRNBAUM: A subsidy, a payment from the federal government to average folks, and as part of a broader tax policy that is redistributed, or to spread the wealth around, as Obama himself pointed out.

I think the argument that Obama is a straight down the line liberal when it comes to taxation and would redistribute the wealth and hand out more welfare checks, if it were stated that flatly by the McCain folks, could actually have broader impact than he is now having.

Talking about refundable tax credits--

HUME: He is simply saying that people who don't pay taxes are going to get money back through a supposed tax credit, which isn't really a welfare program.

BIRNBAUM: He's explaining it more than he needs to. I think if he were more direct he would have more of an impact, and it could move things(ph) at least a little bit.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: The issue could be, maybe arcane, but it is a true intellectual fraud, linguistic fraud.

Look, if the government were to send everybody who works in America except the top five percent a check on their birthday, it would be the exact equivalent of this so-called rebate, except that the checks would arrive staggered rather than all on one day.

It is a handout. It has nothing to do with taxation. The only thing it has to do with taxation is for those Americans who are paying income tax. Instead of the government mailing you a check and you mailing it back with the other owed taxes, the government saves on the postage and takes it off your income tax.

For the 40 percent who pay no income tax, it is a check in the mail and the government pays postage.

Democrats tried this in 1972, but McGovern offered a demo grant and it was laughed out of the political arena because it was ridiculous. The Democrats have learned you don't call it a "grant." You call it a "tax rebate" and you sell it as a tax cut, which it is not.

Remember, Democrats never spend any more. They always invest. And if they aren't investing, that spending is called a tax cut. That's how it works. It's worked, and Obama has cashed in on this brilliantly.

HUME: But part of it here is the language of budget-speak in Washington. Something is called "refundable." I always thought in order for something to be a refund you had to fund in the first place to get refund, or if had a rebate, you had to bate in the first place, or pay up in the first place.

Under this system you get something refundable when you never funded it in the first place. It works out pretty well for those who use the language, doesn't it Mort?

KONDRACKE: Yes.

But this is sounding like a Washington argument, the way McCain is expressing it. And I don't think it is making any difference to people who have seen their wages flat for the last ten years or more and have higher health costs and education costs. It's a gift to them--yes, it is.

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