McCain would make permanent the tax cuts that President Bush introduced at the start of his first term and that are set to expire. He would set the tax bracket for the highest-income Americans at 35%.
The Arizona senator would also cut the corporate profit tax rate from 35% to 25%, arguing that the government's high business taxes discourage domestic investment. In future years, he would cut in half the long-term capital gains tax, to 7.5%.
To help taxpayers with income under $50,000, McCain would double the personal exemption for dependents to $7,000 by 2016.
Holtz-Eakin said the distribution of income and wealth in the U.S. should be a concern, but it is secondary to ensuring that the economy is growing. "The problem of inequality isn't driven by tax policy," he said. "The driving force is skills and education. It is happening all over the world. The idea that you are going to reverse this with tax policy misses the underlying problem."
He added, "And this is the wrong time to raise taxes at all."
Obama proposes a wide range of tax changes. He would make most of the Bush administration's tax cuts permanent but increase the tax brackets on the wealthiest Americans to 39.6%. He would also boost the tax rate on capital gains from 15% to 20% for high-income taxpayers.
Income tax would be eliminated for seniors with gross income of less than $50,000. For low-income workers, he proposes a "Making Work Pay" plan that would give them up to $500. For taxpayers who do not itemize their deductions but pay mortgage interest, he would offer a credit of up to $800. He would expand the child-care tax credit, making it refundable for those who don't pay taxes.
"Typical middle-class families have trouble making ends meet," Deese said. "That drives a lot of the economic problems we are facing. So, let's cut their taxes directly and help them with direct needs, like college tuition and child care."
At the same time, some independent economists accuse both candidates of dodging the most severe long-term economic problems facing the nation -- the kind of problems that could swamp any discussion of equality.
"My biggest concern with the campaign is what they did not talk about: Social Security debt, Medicare debt and public education," said William Niskanen, a Cato Institute economist who served in the Reagan administration. "We will have big increases in taxes ahead unless we address the implicit deficits for Social Security and Medicare."
Eugene Steuerle, vice president of Peter G. Peterson Foundation and an economist who has served in Republican and Democratic administrations, said the federal government had made promises to the American public that would be difficult to keep.
About $1 trillion a year in future spending for programs, including Medicare, Social Security, civil-service retirement benefits and veterans benefits, will not be met by future revenues, he said. "You have to vote on the basis of instinct," Steuerle said, "because neither candidate is saying very much."
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ralph.vartabedian@ latimes.com
