McCain Plan Calls for Cutting Taxes, Discretionary Spending

Posted July 9, 2008 at 2:58pm

As the economy sinks further into a rut and the Dow Jones hits disappointing lows, the presidential candidates are being forced to answer questions about how they will help Americans get back on their feet.

Presumptive Republican presidential nominee Sen. John McCain is stepping up to the plate with a plan that will lower taxes and limit discretionary spending.

The crux of the Arizona Senator’s plan is lowering taxes for the average American and simplifying the payment process.

McCain’s economic plan is outlined on his campaign Web site and detailed in a speech he delivered at Carnegie Mellon University in Pittsburgh on April 15.

“Americans do not resent paying their rightful share of taxes — what they do resent is being subjected to thousands of pages of needless and often irrational rules and demands from the IRS,” he said in the speech. “We are going to create a new and simpler tax system — and give the American people a choice.”

McCain says he will enact an alternative tax system that will offer two tax rates and “generous standard deductions.” If elected, the Arizona Senator also plans to repeal the alternative minimum tax, a move he says would save middle-class families about $60 billion in a single year. The presumptive nominee also proposes raising the personal exemption for each dependent from $3,500 to $7,000.

In keeping with his plan to lower the burden of taxes, the Senator will propose that Congress reduce taxes on American companies. Under McCain’s plan, employers will pay a federal corporate tax rate of 25 percent rather than 35 percent.

“As it is, we have the second-highest tax on business in the industrialized world,” he said. “High tax rates are driving many businesses and jobs overseas — and, of course, our foreign competitors wouldn’t mind if we kept it that way.”

While taxes are McCain’s main focus, the Arizona Senator also plans to address the housing and mortgage crisis with his HOME plan.

The plan will make those who are in possession of a nonconventional mortgage taken after 2005 eligible for a loan from the FHA HOME Office that will replace their mortgage, according to the McCain campaign Web site.

“In place of your flawed mortgage loan, you’ll be eligible for a new 30-year fixed-rate loan backed by the United States government,” McCain said during his Pittsburgh speech. “Citizens will keep their homes, lenders will cut their losses and everyone will move on — following the sounder practices that should have been observed in the first place.”

McCain also plans to create a task force within the Justice Department that will review the mortgage crisis and bring to light any criminal activity that may have occurred.

McCain’s financial plans extend all the way to Washington, D.C., where the Senator wants to see some major changes. A longtime opponent of pork-barrel spending, the Senator says he will not stand for earmarks.

“I will use the veto as needed and as the Founders intended,” he said in his address. “I will veto every bill with earmarks, until the Congress stops sending bills with earmarks.”

He also plans to stop discretionary spending, with the exception of military and veteran funding, for one year in an effort to evaluate federal programs and eliminate those that are deemed ineffective.