Get ready for the Gore chorus of "risky scheme", "risky scheme", "risky scheme"...
Bush tax plan would aid very rich and working poor
10.06 a.m. ET (1518 GMT) December 1, 1999
By Ron Fournier, Associated Press
DES MOINES, Iowa (AP) — Republican presidential candidate George W. Bush today proposed slashing tax rates at all income levels with a five-year, $483 billion package "designed to sustain our nation's prosperity and reflect our nation's decency.''
Bush's economic package ignited the sharpest exchange between the two-term Texas governor and one of his top rivals, conservative millionaire Steve Forbes.
Forbes, who supports a massive overhaul of the tax system to implement a flat 17 percent tax rate, called Bush's plan "something only the timid could love — simply more political expediency.''
Bush, the front-runner who has avoided confrontation with his fellow GOP hopefuls, fired back.
"I think he likes to campaign by tearing down other people. That's just not how I'm going to campaign. Republicans will have a choice,'' Bush said in a brief interview with The Associated Press.
Just minutes before, Bush and Forbes shook hands as they greeted voters at a farmer's breakfast, and they exchanged best wishes for Thursday night's Republican debate, the first for Bush.
Bush's package, targeting the working poor as well as the very rich, embraces conservative economic staples with a populist twist, further defining what he means by his promise to be a "compassionate conservative.''
In his address unveiling the proposal, Bush focused on the benefits his plan would bring to the working poor and middle class, saying that half of the cost of his income tax cuts will help people who are trying to work themselves out of poverty.
"We will take down the tollgate on the road to the middle class,'' Bush said in prepared remarks, noting no middle class family would face a federal income tax rate higher than 25 percent.
Doubling the child tax credit and lowering the marginal income tax rates would eliminate taxes for a four person family earning $35,000, a tax cut of more than $1,500, Bush said. Many two-income families making $50,000 would see their income taxes cut by half, Bush said.
"Let's start where the need is greatest: with social mobility for hard-working American families,'' Bush said. "We need a tax system that makes it easier, not harder, to join the ranks of the middle class.''
The package would cut taxes a bit deeper than a similar GOP congressional package vetoed this year by President Clinton, but is not nearly as ambitious as flat-tax overhauls championed by Forbes and other conservatives.
Bush's package would:
—Simplify and reduce marginal tax rates. Incomes are now taxed at five levels — 15 percent, 28 percent, 31 percent, 36 percent and 39.6 percent. Bush would propose four rates, with the poorest paying 10 percent and the wealthiest paying a top rate of 33 percent.
—Double the $500 child tax credit, a benefit to the middle class. Bush would open the credit to people earning up to $200,000; the current cap is $100,000.
—Reduce the penalty paid by couples who get married by restoring a deduction that ended in 1986.
—Eliminate all estate taxes, a GOP favorite that would primarily aid small business men and women, farmers and family members who inherit huge sums.
—Make permanent the research and development tax credit that Congress just extended for five years.
—Raise from $500 to $5,000 the amount of money a person can put in tax-free education savings accounts. Current law limits the accounts to college expenses; Bush would expand it to kindergarten through 12th grade.
—Eliminate the so-called "earnings limit'' for Social Security. Recipients between the ages of 65-69 currently lose part of their Social Security benefits for every dollar they earn over $17,000.
Bush said the package would benefit give groups, the working poor, the middle class, entrepreneurs, charitable givers and the elderly — purposely avoiding a direct reference to the people who would save tens of thousands of dollars under a sweeping tax cut program — wealthy Americans.
The Bush tax plan also relies on economic assumptions somewhat rosier than those forecast by the Congressional Budget Office, which estimated an after-inflation growth rate of 2.3 percent over the next decade. The Bush plan projects a 2.7 percent growth rate.
Congress proposed a 10-year, $792 billion package that would have reduced all five marginal income rates by 1 percentage point, eased the so-called "marriage penalty,'' phased out estate taxes and expanded the IRA-like education savings accounts to $2,000.
Clinton vetoed the bill, saying it would have run the nation deeper into debt. Democrats say Bush's package is just as flawed, even though it lowers rates for low- and middle-income Americans.
"His plan is going to needlessly risk the economic prosperity and jeopardize the future of Social Security and Medicare,'' Democratic Party spokeswoman Jenny Backus said.
Tax cuts are a staple of GOP presidential primaries, but Bush is especially eager to establish his supply-side credentials to counter concerns that he will follow the footsteps of his father, the former president who is still blamed for breaking a "no new taxes'' promise.
Among Bush's GOP rivals, Arizona Sen. John McCain says he would "dramatically increase'' the number of Americans taxed at the lowest rate, 15 per cent, by letting couples earning up to $70,000 qualify for that tax bracket. Forbes and Gary Bauer support flat taxes. |
