Twisting the facts on taxes

SUMMARY: A new television ad from John McCain twists the facts to claim Barack Obama will raise taxes on the middle class. We separate the truth from fiction.

New political ads from Sen. John McCain accuse Sen. Barack Obama of raising taxes on the middle class.

"Obama voted to raise taxes on people making just $42,000," an announcer says in a television. "He promises more taxes on small business, seniors, your life savings, your family."

Another ad, made for for Spanish-language radio, makes similar claims. Translated, the ad asks, "Are you ready for the higher taxes on income, savings and the sale of your home that Barack Obama promises?"

Let's start out by saying that Obama's tax proposals are crafted so that tax increases hit those couples $250,000 or more a year, or $200,000 for singles. He also proposes a $1,000 tax credit on income for working families ($500 for singles).

So did Obama "vote to raise taxes on people making just $42,000"? Not exactly.

To support this statement, the McCain campaign points to two Obama votes on budget resolutions, one in March 2008 and another in June 2008.

Problem is, neither of these votes actually raised taxes, nor were they expected to.

Instead the votes approved budget resolutions, which are blueprints for the federal budget. The resolutions set targets for the committees that write legislation on taxes and spending. Obama joined Democrats on what were largely party-line votes expressing the desire to roll back the Bush tax cuts in order to fund popular programs.

The McCain campaign may be technically correct that Obama voted for the measures, which did express support for tax increases, but they are non-binding documents that cannot be viewed as the equivalent of legislation that establishes law. The ad gives an overall false impression that Obama as president would favor tax increases for incomes of $42,000. He does not.

Another statement claims that Obama "promises more taxes on small business, seniors, your life savings, your family." This is true is if you happen to be a small business, a senior or a family making more than $250,000 a year, or $200,000 for a single person. Otherwise, it's generally not the case. In fact, Obama advocates eliminating income taxes for seniors with incomes less than $50,000

The "life savings" statement, according to the McCain campaign, applies to Obama's plan to raise taxes on dividend and capital gains. We've looked at similar claims before. Increases to dividends and capital gains taxes will affect people in upper income brackets who have investments in the stock market or mutual funds. But those taxes do not apply to tax-deferred investments like 401(k)s, individual retirement accounts (IRAs) and some tax-deferred college savings plans. Capital gains and dividends taxes would stay the same for people in lower income brackets of $250,000 or less, according to the Obama plan.

The Spanish language ad makes similar claims but pushes them one step farther by claiming Obama would raise taxes on "the sale of your home."

We've run across that claim before from anonymous e-mails. Obama does not advocate new taxes on home sales. It's possible that some lucrative home sales would be subject to additional capital gains taxes under Obama's plan, but it would apply to home sales where the profit margin is $250,000 or higher for single people making more than $200,000, and home sales where the profit margin is $500,000 or higher for couples making more than $250,000.

McCain's ad begins, "Life in the spotlight must be grand, but for the rest of us times are tough," and it concludes with, "Painful taxes, hard choices for your budget." The ad gives the impression that Obama wants to raise taxes on the middle class, but the facts don't agree.