Democratic presidential candidate Sen. Barack Obama, speaking in Canton, Ohio, on October 27, referred to Republican presidential candidate Sen. John McCain’s tax plans and said, “It’s not change when he wants to give $200 billion to the biggest corporations or $4 billion to the oil companies.”
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Obama spokesman Ben LaBolt said the numbers cited by Obama come from two studies analyzing McCain’s tax proposals, including cuts in the corporate tax rate. The two studies were done by unrelated organizations. LaBolt also said that Obama’s remarks do not refer to two separate tax cuts — the $4 billion in purported cuts to oil companies is part of the larger $200 billion.
Both studies project the effects of McCain’s proposal to cut the corporate tax rate from the current maximum of 35 percent to a maximum of 25 percent in a phased reduction over the next seven years.
One analysis, published in March by the liberal Center for American Progress Action Fund, predicted how large oil companies would fare under McCain’s proposed corporate tax reductions. Based on taxes that the five largest American oil companies paid in 2007 and calculating what the study called “savings under McCain plan,” the study concludes that those five companies would realize a total tax cut of $3.8 billion a year under McCain’s plan to cut the corporate rate.
On its Web site, the organization refers to the tax reduction as “nearly $4 billion.” LaBolt said the Obama campaign uses the $4 billion figure because the study included only the five largest American oil companies, and the total tax cut to all American oil companies would be bigger. Also, 2008 earnings for oil companies are expected to be higher than earnings in 2007.
The other study — a detailed analysis of both McCain’s and Obama’s tax plans — was done by the nonpartisan Tax Policy Center. That study predicted the impact of McCain’s tax proposals on revenue in several categories. The Obama campaign arrived at its $200 billion figure by combining various categories in that study. Roberton Williams, principal research associate for the Tax Policy Center, said the Obama campaign’s calculation of $200 billion from McCain’s proposed reduction in corporate taxes was an accurate conclusion.
The McCain campaign contends that lowering the corporate tax rate will enhance business development and create jobs in the United States. In an interview on CNN’s “The Situation Room” on Oct. 22, McCain cited lower tax rates in other countries as being a key reason American companies move business overseas. “We should be cutting corporate tax for every business in America,” he said. “To somehow allege that a company or corporation that can be international is not going to go where they pay the lowest taxes and create the most jobs is just foolishness.”
The Verdict: True. Obama’s statement accurately reflects two studies of McCain’s tax proposals.