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A Project of The Annenberg Public Policy Center

Reckless Driving

The Obama-Biden campaign has released an ad as part of its “closing argument” to the American people. But we have a few factual objections to raise.

The ad is called “Rearview Mirror” and says that if you “wonder where John McCain would take the economy” just “look behind you,” alluding to the Bush administration. The ad even pictures President Bush’s face in the rearview mirror of a car.

But it touts some misleading claims Obama has dropped along the long campaign trail.

  • The ad says McCain would “keep tax breaks for companies that ship our jobs overseas.”

As we’ve explained a few times before, this refers to an aspect of the tax code that allows companies to defer paying U.S. corporate income taxes on profits earned and left overseas. A number of economists, including left-leaning ones, have said that eliminating this “tax break” would not put an end to the offshoring of jobs. In fact, they say it’s not a major reason companies move jobs overseas.

  • The ad says McCain “wants $4 billion in new tax breaks for big oil.”

Again, as we’ve pointed out a few times before, McCain is not proposing new tax breaks specifically targeted to the oil industry. He’s proposing a general reduction in the corporate income tax rate from 35 percent to 25 percent. The liberal Center for American Progress Action Fund calculated that this would save the five largest oil companies $3.8 billion per year. But cutting the corporate rate would benefit all companies.

  • The ad says McCain “would tax your health care benefits for the first time ever.”

As we’ve explained a few times before, McCain would, for the first time, tax health care benefits workers get at their jobs, but for most Americans, the increased tax bill would be more than offset by McCain’s tax credit. The ad doesn’t mention that. McCain would give a tax credit of up to $2,500 to individuals and $5,000 for couples or families, and only those in high tax brackets and with very high-priced plans would pay more than that in taxes.

A family in the top income tax bracket would pay more in taxes if their benefits were worth $14,286 or more. The Tax Policy Center estimated that the top 40 percent of income earners in the U.S. would pay more in taxes than they’d get with the credit by 2018. (In 2007, the top 40 percent were those with income above $62,000.)