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In a rally in Hershey, Pa., John McCain accused Barack Obama of using different numbers to talk up his tax plans.
"Senator Obama has made a lot of promises," McCain said. "First he said people making less than $250,000 would benefit from his plan. Then this weekend he announced in an ad that if you're a family making less than $200,000, you'll benefit. But yesterday, right here in Pennsylvania, Senator Biden said tax relief should only go to middle class people, people making under $150,000 a year.
"Are you getting an idea of what's on their mind? A little sneak peek. It's interesting how their definition of rich has a way of creeping down. At this rate, it won't be long before Senator Obama is right back to his vote that Americans making just $42,000 a year should get a tax increase."
The $42,000 tax vote is a dubious claim, one we've checked before and found Barely True . It's based on a vote Obama made that set broad revenue goals. No one's taxes went up as a result of the vote.
But McCain is on firmer ground when he talks about the different numbers Obama and Biden have used to tout their tax plans. They have used different numbers, and it can get confusing.
We'll say right off the bat that candidates' tax proposals are general outlines that don't have the specificity that actual tax law requires. So there are gray areas, particularly when we're talking about specific income amounts.
We've also noticed that candidates don't like to talk about the difference between single people and couples.
So Obama will say he won't raise taxes for people making $250,000 or less, and McCain will say he offers a health care tax credit of $5,000. But these numbers are for couples . If you're a single person, Obama will likely raise your taxes if you make more than $200,000, and you would only get $2,500 from John McCain's health care tax credit. Roughly 47 percent of people file taxes as a single person, so this is not an insignificant difference.
But the numbers McCain cited in his speech seem to all apply to families, so let's zoom in closer on that.
Obama often says that he won't raise taxes for those making $250,000 or less. This appears to be generally true for couples. He also offers tax credits to workers of $500 each — and, yes, that's $1,000 for couples if both spouses work. The tax credits, though, phase out as you get closer to the $250,000 mark. The Obama campaign hasn't detailed how the tax credits phase out. The nonpartisan Tax Policy Center believes the tax credits will phase out generally at about $150,000 for couples.
The Obama campaign's tax calculator, which we evaluated in depth previously , sheds some additional light on the issue of credit phase-outs. If you mark the category of married filing jointly, the Obama tax calculator shows that for the $100,000 to $150,000 income category, there is a tax cut of $1,000. For the $150,000 to $200,000 income category, it shows a tax cut of $500. And for the $200,000 to $250,000 category, it shows a tax cut of $0. The calulator appears to assume the both members of the couple work. So it seems like the credits start phasing out around $150,000 and completely phase out around $200,000.
We want to issue a big word of caution here. People with the same income levels can have different tax burdens. Different sources of income tend to be taxed differently, and you must work to get Obama's tax credit. The Tax Policy Center's analysis projects that most people with low incomes will see lower taxes under Obama's plan — but not all of them. Conversely, their analysis projects that most of the top 1 percent of income tax filers will see higher taxes under the Obama plan — but again, not all of them. In that high-earning group, 93 percent will see their taxes go up, but 7 percent won't, because of the intricacies of the tax system. Did you make that exclusive 7 percent of the top 1 percent? Only your accountant knows for sure. (For more detail on these points, take a look at the Tax Policy Center's analysis of the Obama plan .)
Getting back to McCain's statement: Did Obama say that "people making less than $250,000 would benefit from his plan"? Obama typically states that he won't raise taxes on people making $250,000 or less, but the McCain campaign points to a statement Obama made in Powder Springs, Ga., on July 8, 2008.
Obama emphasized that he would not raise taxes on people making less then $250,000, then said: "If you make $ 250,000 a year or less, we will not raise your taxes. We will cut your taxes."
That's problematic, because Obama clearly does not offer a tax cut for everyone making less than $250,000.
But we only found a few times that Obama or his advisers talked about tax cuts for people making less than $250,000. Much more often, they said they wouldn't raise taxes on people making less than $250,000. It's a small but significant difference, and it's possible Obama simply tripped up his lines in Powder Springs.
McCain then said Obama "said in an ad that if you're a family making less than $200,000, you'll benefit." That's also true. Obama said in a television ad, "If you have a job, pay taxes and make less than $200,000 a year, you’ll get a tax cut." Obama's statement seems very likely true, though naturally we hesitate to say it's true always and everywhere, for the reasons outlined above.
Finally, McCain went after Joe Biden, saying that Biden said tax cuts "should go to middle class people — people making under $150,000 a year," a comment Biden made to a Pennsylvania television station on Oct. 28, 2008. Biden did say that, but the Obama campaign said he only meant it as an example of the types of income levels that should get a tax cut.
That may be right; it's hard for us to say based on Obama's proposals. But $150,000 is also the income level that the Obama tax calculator shows that tax credits start phasing out. The Tax Policy Center uses that number as a phase-out for tax cuts. We can't say that's what was in Biden's head, but it seems likely to us that the $150,000 number is likely where the tax credits will start going away.
To be clear, we don't see evidence that Obama is crawfishing backward from his tax plan, as McCain implies. Most of the statements McCain refers to are consistent with Obama's long-stated tax policies. But McCain is also correct that there are a lot of numbers flying around that can be used in different ways. Voters need to be cautious in evaluating these numbers, because there are caveats and assumptions behind them. For this reason, we rate McCain's statement Mostly True.
CNN.com, John McCain campaigns in Hershey, Pa. , Oct. 28, 2008
PolitiFact.com, McCain repeats questionable tax claim , Sept. 26, 2008
Internal Revenue Service, SOI Stats , 2006
Tax Policy Center, An Updated Analysis of the 2008 Presidential Candidates' Tax Plans: Executive Summary , Sept. 15, 2008
Barack Obama campaign Web site, Tax calculator , accessed Oct. 28, 2008
CQ Transcripts, Barack Obama remarks in Powder Springs, Ga., July 8, 2008, accessed via Nexis
Barack Obama campaign Web site, Defining Moment a d, accessed Oct. 29, 2008
WNEP, Interview with Joe Biden , Oct. 28, 2008
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