Comparison Issue #1: Obama/McCain "Death" Tax Reform

Where do McCain and Obama stand on the Estate Tax?

Estate taxes are constitutionally unsound. Simply put, what right does government have in taxing assets twice, three times, sometimes four times?

Where’s the fairness is that?

Previous Tax Foundation research has found the estate tax acts as a strong disincentive toward entrepreneurship.

A 1994 study found that the estate tax’s 55 percent rate at the time had roughly the same disincentive effect as doubling an entrepreneur’s top effective marginal income tax rate. The estate tax has also been found to impose a large compliance burden on the U.S. economy.

Some past economic studies have estimated the compliance costs of the federal estate tax to be roughly equal to the amount of revenue raised—nearly five times more costly per dollar of revenue than the federal income tax—making it one of the nation’s most inefficient revenue sources.

Here’s what Obama has said about the Estate tax:

Obama spoke out in June 2006 against making recent, temporary estate tax cuts permanent, calling the cuts a "Paris Hilton" tax break for "billionaire heirs and heiresses."

Also,

"We have to stop pretending that all cuts are equivalent or that all tax increases are the same. Ending corporate subsidies is one thing; reducing health-care benefits to poor children is something else. At a time when ordinary families are feeling hit from all sides, the impulse to keep their taxes as low as possible is honorable. What is less honorable is the willingness of the rich to ride this anti-tax sentiment for their own purposes."

Here’s what McCain has said, from Fact Check:

"It is true that McCain opposes permanent repeal of the estate tax, which under terms of the tax cuts enacted in Bush's first term expires for one year in 2010 and then returns the following year. Many conservatives are pushing to make repeal permanent, but a McCain spokeswoman confirmed that the senator stands in "opposition to full repeal of the estate tax" due to its "long-term fiscal implications." Immediate repeal of the estate tax in 2006 would cost the government almost $290 billion in tax revenue through 2015, according to the Joint Committee on Taxation.

But McCain's spokeswoman said he is currently backing efforts of bipartisan Senate negotiators to reach a compromise that would retain the estate tax in a much-reduced form. Sen. Jon Kyl, McCain's fellow Arizona Republican, plans to introduce an alternative proposal that would put the exemption level anywhere from $7 million to upwards of $10 million. Kyl has held talks with ranking Finance Committee Democrat Max Baucus, but no agreement has been reached on the exemption level or the tax rate. The Capitol Hill publication CongressDaily reported Aug. 16 that Kyl is "likely" to reduce the estate tax rate to 20 percent to match the capital-gains rate in 2010. The current top rate is 47 percent."

Both candidates are against an outright elimination of the Estate Tax but McCain is at least willing to lower the marginal rate of taxation, which is a good thing.

So, in a nutshell, both candidates are wrong on this issue, in my opinion, with Obama being more wrong. Furthermore, Obama takes dumb, cheap shots in his rhetoric and plays on class envy.

Advantage McCain.