Countering Clinton's push to return to great society

In response to the $42 billion in new and expanded government programs President Clinton has called for over the past few weeks, several Republicans in the House and Senate have announced various tax-cut proposals to return to the taxpayers what could emerge as a $30-billion budget surplus this year, totaling a projected $600 billion over the next five years.

Conservative policy analysts predict, however, that only incremental tax reform, not systemic reform such as a national sales tax or a flat tax will emerge from the current Congress.

Republican-sponsored tax-cut and reform proposals introduced so far include:

Middle Class Tax Relief Act-This measure sponsored by Sen. Paul Coverdell (R.-Ga.) would broaden the federal income tax brackets on median annual incomes for singles and couples, The lowest 15% tax bracket for singles would stretch up to $35,000, instead of the current $25,350 cap, while for married couples it would rise to $50,000 in place of $42,350. The Tax Foundation estimates this change would allow taxpayers to keep about $25 billion.

Pro-Family Tax Overhaul-This multi-point proposal by Sen. John Ashcroft (R.-Mo.) would allow workers to deduct Social Security payroll taxes from their income taxes, saving about $1,200 a year for the average two-income family. It would also: End the marriage penalty, which taxes the second income of a married couple at a rate higher than that of single working couples who live together. Reduce marginal tax rates. Repeal the estate tax. Eliminate the Alternative Minimum Tax. Eliminate the 18-month holding period on capital gains. This plan would cut taxes an estimated $985 billion between 1998 and 2002.

Marriage Tax Elimination Act-As with the Ashcroft plan, this bill sponsored by Representatives Dave McIntosh (R.-Ind.) and Jerry Weller (R.-Ill.) would eliminate the marriage penalty, which averages $1,400 for more than 21 million married couples, according to the Congressional Budget Office. Under current law, a two-income married couple in which each spouse earns $30,500, is taxed in the 28% federal bracket, while an unmarried couple living together making the same annual income is taxed in the 15% bracket. The married couple pays $8,563 in taxes while the unmarried couple pays $7,184. This bill would allow married couples, with or without children, to file either individually or jointly, whichever provides the greater tax benefit.

The Flat Tax-House Majority Leader Dick Armey's plan would eliminate the current tax code (3,458 pages long) and tax everyone at the same rate: 17%. No deductions or loopholes. A taxpayer could file his return on a post card, says Armey. "No death tax, capital gains tax, marriage penalty, and no Social Security benefit tax."

National Retail Sales Tax Act-The plan of GOP Representatives Billy Tauzin (La.) and Dan Schaefer (R.Colo.) would eliminate the IRS and current tax code and substitute a national sales tax of 15%.

House Ways and Means Chairman Bill Archer (R.Tex.), whose committee will have to approve any tax changes, held a press conference last week during which he announced that his committee would "consider" four tax reforms in crafting the 1998 Taxpayer Relief Act: across-the-board tax bracket relief; elimination of the marriage penalty and estate tax; and elimination of the 18-month holding period on capital gains. There would be no tax increases.

"Republicans probably will cut taxes this year, it's just a question of how much," Steve Moore of the Cato Institute told HUMAN EVENTS. But he warned that the cuts could well be less than conservatives would like. "We've got a lot of big spenders in the Republican Party," said Moore, "and they are running the committees that spend the money."

Copyright Human Events Publishing, Inc. Jan 30, 1998
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