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As an Issue, Taxes Favor Obama
Polls Lean Toward Democrat on a Traditional GOP Strength

By Michael Abramowitz and Robert Barnes
Washington Post Staff Writers
Friday, October 24, 2008

SARASOTA, Fla., Oct. 23 -- In the final weeks of the presidential campaign, John McCain has turned to an argument that has served Republicans well in recent history, using stump speeches and television ads to drive home the idea that the Democratic presidential nominee would raise taxes on average Americans.

Campaigning across the battleground state of Florida in his "Straight Talk Express" bus on Thursday, McCain invoked Joe the Plumber, the Ohio tradesman who McCain argued is the kind of voter who would be harmed by Sen. Barack Obama's economic policies.

"There's Joes all over here," McCain said, as he surveyed thousands of supporters spread out across a lumberyard at Allstar Building Materials in Ormond Beach. "We shouldn't be taxing our small businesses more, as Senator Obama wants to do. We need to be helping them expand their businesses and create jobs."

But for the first time in decades, Democrats appear to have the upper hand in the debate over taxes. Independent analysts estimate that only a small fraction of small-business owners would see their taxes increase under Obama's plan, and polls show that voters are beginning to accept Obama's argument that more Americans would see their taxes cut under his proposals. Even some Republicans said they worry that Obama has more than neutralized a signature GOP issue with the promise of a tax cut for middle-class Americans, while putting McCain on the defensive by alleging -- unfairly, in the view of independent analysts -- that the Republican would raise taxes on health-care benefits.

Campaigning in Indianapolis on Thursday, Obama mocked McCain for making "the strange argument that the best way to stop companies from shipping jobs overseas is to give more tax cuts to companies that are shipping jobs overseas. More tax cuts for job outsourcers. That's what Senator McCain proposed as his answer to outsourcing."

A day earlier, Obama ridiculed the use of Joe the Plumber. While Joe is "cool," Obama said, "let's be clear who Senator McCain is fighting for. He's not fighting for Joe the Plumber. He's fighting for Joe the Hedge-Fund Manager."

Appearing on CNN Wednesday, McCain defended his proposal to cut corporate tax rates by saying that high corporate taxes are what force American companies to look overseas for expansion. He said Obama is "all about" trying to take money from the wealthy, and that corporations already pay their "full freight" of 35 percent. He wants to cut this tax rate to 25 percent.

Virginia Governor Timothy M. Kaine (D) said: "Virginians and Americans feel like the McCain strategy's already been discredited. Focusing tax cuts on the wealthiest and deregulating the economy -- hey, that's been the strategy that's been tried for the last eight years, and that's why we are where we are."

In the latest Washington Post-ABC tracking poll, Obama maintains a 51 to 43 percent lead over McCain on handling taxes. Obama's edge on this question in the Post poll is identical to the one President Bush held over John F. Kerry at this stage four years ago. At about this same point eight years ago, Bush was up 13 points on taxes over Al Gore.

Sara M. Taylor, former White House political director for Bush, said she does not think that Obama will implement his tax plan as promised, but she expressed grudging admiration for his success in making political headway on the issue. "Senator Obama has made it a central part of his campaign that most of the people are going to get a tax cut," Taylor said. "While that may or not be true in reality, they have done a good job of convincing people it is true."

Both McCain and Obama are proposing tax cuts, although Obama is also proposing increases on wealthy Americans. McCain says he would cut taxes on corporations and capital gains, give a bigger child tax credit, and permanently extend the Bush tax cuts for all income levels. Obama would limit the extension of the Bush tax cut to those making less than $250,000 a year, while providing targeted tax breaks for workers, retirees and other specific groups.

Under Obama's plan, for instance, most working-class families would receive a net tax cut, thanks to a rebate for payroll taxes of $500 for individuals and $1,000 for couples. That part of the Obama plan has come under most intense fire from McCain and his allies in recent days.

McCain aides said they will fight back hard on the issue and concede that they must regain lost support on taxes if they are to make the case that their candidate would be a better steward of the economy. To that end, they plan to spend heavily on a new ad that builds upon the conversation Obama had recently with Joe the Plumber (Samuel J. Wurzelbacher of Holland, Ohio), in which Obama was quoted as saying he wants to "spread the wealth," prompting McCain to accuse the Democrat of being eager to engage in wealth redistribution.

McCain's ad features several different people looking into the camera and saying, "I'm Joe the Plumber." One man accuses Obama of wanting to use the man's "sweat to pay for his trillion dollars in new spending."

McCain's advisers said their private polling suggests the Joe the Plumber campaign is gaining traction, and that people understand that taxes should not be raised in a recession, even on the wealthy. Small-business owners are apoplectic about Obama's tax and spending plans, McCain adviser Nicolle Wallace said. "We have a very powerful closing argument," she said in an interview. "Most people generally believe you should lay a foundation for growth. Most people don't believe you take success and spread around the wealth."

But McCain's allies say Obama's ability to flood the airwaves on the issue, particularly with an ad that goes after McCain's plan to eliminate the tax deductibility of employer-provided health coverage, has shifted the conversation (The money would be made up with a refundable tax credit for individuals to buy health insurance, but Obama has made headway by arguing that the plan amounts to a major tax increase on the middle class).

Grover Norquist, a leading anti-tax activist, said the ads are swamping McCain's message. "The candidate that is running as the tax-cut candidate in the ads is Obama," he said, adding that McCain's credibility as a tax cutter has also been undermined because he opposed Bush's tax cuts before embracing them.

Democrats in battleground states professed to be unconcerned about McCain's criticism on taxes. Former Virginia governor and U.S. Senate candidate Mark Warner said the GOP tax message lacks credibility this year, because the country realizes what a tough economic condition exists and that the next administration must do something.

In Pennsylvania, Democratic Gov. Edward G. Rendell said recently that, in his state, Obama had reversed the perception that he would raise most people's taxes. Along with Obama's plan to stimulate the economy, "That's what people want to hear, and that's what's turned the election," Rendell said.

Barnes reported from Indianapolis.

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