CNN: Obama's Tax Plan 'Robbing Peter and Giving to Paul'

     Barack Obama has a great tax plan, at least according to one expert on CNN’s “Your Money” Oct. 19.

     Allan Lichtman tried to convince "Your $$$$$" viewers that Sen. Barack Obama has the better plan during a comparison of the presidential candidates’ positions on taxes. Lichtman, author of “White Protestant Nation” and an American University history professor, praised Obama's tax plan.

     Lichtman declared that he trusts Obama more on the economy than Sen. John McCain because “Obama has said he is going to reduce taxes on 95 percent of Americans and 95 percent of small businesses.” The historian criticized McCain’s willingness to continue the Bush tax cuts which “overwhelmingly favor the wealthy.”

     "Giving to the rich is what we've been doing for eight years and it's been a crashing failure," Lichtman said. Rather than "giving to the rich," Obama plans to take from the rich by raising their taxes.

     Host Ali Velshi agreed with Lichtman. Repeating his claim that McCain cuts would favor the rich, host Ali Velshi said "let's just be plain about this.”

     But Lichtman’s sparring partner, Stephen Moore of the Wall Street Journal disagreed and criticized Lichtman's support of Obama's tax plan. Moore warned that Obama advocates "a tax plan that puts a big bulls-eye on the small businesses." He also warned that Obama’s plan to raise taxes on dividends and capital gains will discourage investment.

     Moore is the senior economics writer for the Wall Street Journal and co-author of “The End of Prosperity.”

     According to Moore, Obama's plan would raise taxes on 50 percent of small businesses with 20 or more employees.

     While Moore did not argue with Lichtman's claim about the "crashing failure" of the Bush tax cuts on “Your $$$$$,” he has opposed that view in the past. A 2007 BMI report [1] quoted Moore's March 2003 testimony before the House of Representatives when he stated it is a myth that the "Bush tax cut won't stimulate economic growth or jobs." [2] In that testimony, Moore cited the job growth that followed the Kennedy and Reagan tax cuts.

     Moore warned that Obama's plan lacks a "wealth creation" component and is about "robbing from Peter and giving to Paul." Echoing John McCain's remarks about Obama's tax plan [3], Moore said that Obama is about "redistributing income" and that he wants to "share the wealth." He later asked how Obama expects to strengthen the economy by raising taxes.

     Velshi asked both experts “how do you create a job?” Lichtman responded by saying you give people an “incentive to invest in high-growth areas” where there is a competitive advantage.

     Lichtman suggested that Obama will fix the economy by investing in a "new green economy." He dramatically stated that "if we're going to have a future it's got to be in green energy," suggesting that green energy is one of the few viable “growth areas.” "The old smokestack economy ain't coming back."

     “The problem with that Allan, is how do you get more investment when you raise taxes on investment,” Moore said noting Obama’s plan to raise dividend and capital gains taxes.

     According to Moore, “A lot of Americans are very nervous about two things: The overspending in Obama’s plan. You know, Allan – Allan Lichtman calls it investment, I just call it more pork-barrel spending. And the fact that most Americans still don’t believe you can grow an economy with higher taxes.”