WASHINGTON -- The tax credit has a very innocuous name: "Making Work Pay." It is a key feature of what Democrat Barack Obama likes to call a tax cut for 95 percent of Americans.

But with less than two weeks left in the presidential campaign, that bland-sounding plank in Obama's economic plan has prompted a major political battle with Republican nominee John McCain.

In a series of tough speeches this week, McCain has assailed the plan as "just another government giveaway" and asserted that it sounded a "lot like socialism." He pointed out that Obama would raise taxes on upper-income Americans to provide a tax cut to millions of people who do not earn enough money to pay federal income taxes.

There is an element of truth in McCain's attacks: Obama's plan would provide a $500 refundable tax credit to low- and middle-income Americans. At least 40 percent of those who would receive the credit do not pay federal income taxes but do pay Social Security taxes and state and local sales taxes.

As a result, a number of analysts say, it is a stretch to say Obama's plan smacks of socialism. Instead, Obama's plan is much like the earned-income tax credit supported by presidents of both parties, and it somewhat resembles the negative income tax championed by conservative economist Milton Friedman as far back as 1962.

"If this is socialism, then we've been socialistic for many decades," said Jodie T. Allen, a senior editor at the Pew Research Center who worked on welfare policy under President Nixon. "The notion that making transfers through the tax system is somehow a totally new form of American behavior is absurd. For better or worse, we use the tax code to subsidize all sorts of behavior."

To qualify for the credit, a person would have to have a job and income. In that sense, it is more conservative than Nixon's 1969 welfare plan, which would have provided all Americans -- even those who did not work -- with a guaranteed annual income. That plan died in the Senate.

"It's a subsidy for working," said Leonard Burman, an analyst for the Tax Policy Center, a Washington organization affiliated with the Brookings Institution and the Urban Institute.

Obama's plan, however, has severe drawbacks. It would complicate an already complex federal tax code. In addition to the work tax credit, Obama champions tax credits for lower-income people for mortgage deductions, college education and savings.

It also would transfer wealth from higher-income people to lower-income Americans. The Tax Policy Center concluded that during the next 10 years, Obama's tax credits would provide $648 billion to families that do not earn enough money to pay federal income taxes.

"It's Internal Revenue Service-administered welfare payments," said William Beach, an analyst for the Heritage Foundation, a conservative organization in Washington.

Beach said that Obama is misleading Americans by promoting the plan as a middle-class tax cut "because it messes up the English language to call someone who doesn't pay (income) taxes a taxpayer."

The tax credits would be prohibitively expensive at a time when the federal deficit is increasing. The Tax Policy Center calculates that the 10-year cost of just the "Making Work Pay" credit would be $710 billion.

Combined with Obama's plan to spend at least $100 billion annually to reform health care and his proposal to spend $150 billion during the next decade to develop alternative energy, critics fear that the already huge federal deficit will soar out of control.

"Both candidates' tax plans do not add up," said Robert Carroll, vice president for economic policy at the Tax Foundation, a nonpartisan research organization in Washington. "Both of them would add trillions of dollars in government debt during the next 10 years."

Obama has said he would allow the 2001 and 2003 tax cuts for families earning $250,000 or more a year to expire on schedule in 2010. Those reductions include taxes on income, capital gains and dividends.

By contrast, McCain wants to extend those tax cuts, reduce the corporate income-tax rate from 35 percent to 25 percent and increase the childhood exemption.

The Tax Policy Center has concluded that McCain's tax plans would cost the federal treasury $4.2 trillion during the next 10 years, while Obama's would cost $2.9 trillion.

jtorry@dispatch.com