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Capitol Comment

    Capitol Comment 265 - Scrap the Code: Good Politics and Good Policy

    01/31/2000

    "Scrap the Code" is becoming a silent mantra in the early stages of the presidential primaries. Most candidates have heard this popular mandate from the public and have responded by making substantive proposals for, or at least paying lip service to, a fairer, flatter tax system.

    In classic grassroots style, the presidential candidates are being pulled toward this issue. Tax reform, once considered dead with the failed 1996 presidential race of Steve Forbes, is now a legitimate issue four years later.

    The unwritten story behind the convoluted rhetoric of cautious presidential candidates and firebrand politicians is that a consensus in favor of a new tax code is emerging. Once considered a partisan conservative issue, support for tax reform in reality crosses party lines. Not only do a majority of the American people support tax reform, a Harris poll showed that 46 percent of Democrats specifically favor a flat tax. Presidential candidates should not fear that tax reform will hurt them in the general election.

    In fact, in classic grassroots style, the presidential candidates are being pulled toward this issue. Tax reform, once considered dead with the failed 1996 presidential race of Steve Forbes, is now a legitimate issue four years later. It is interesting to see how the candidates’ tax proposals actually match up or fail to match up to their scrap the code campaign promises.

    Sen. John McCain’s recent statement to "march to a flat tax from the bottom up" is popular rhetoric. Unfortunately, his plan doesn’t march, crawl or even two-step us anywhere close to tax reform. Instead, he offers a measly tax cut coupled with tax increases while doing nothing to reduce the power and over-reach of the Internal Revenue Service. Campaign finance reform has become a centerpiece of his campaign, yet he overlooks the fact that meaningful tax reform will effectively put the brakes on the fat cat lobbyists in Washington who make their living off the tax code. Sen. McCain should match his rhetoric with substance.

    On the other hand, Gov. George W. Bush has proposed a sizable tax cut that takes us closer to scrapping our nation’s tax code. His proposal eliminates the estate tax, often called the "death tax," which is one of the worst examples of punitive double taxation found in today’s code. Also, the rate cuts and marriage penalty relief contained in his proposal would simplify and lower our tax burden. But, unfortunately, it appears that Governor Bush has made the strategic assessment that, as the frontrunner, he has everything to lose by announcing support for scrapping the code.

    While his dance to appease the media and appear moderate is a political strategy, the governor of Texas would be better off admitting that his plan does move the nation closer to scrapping the code. He should take heart with the polls and understand that voicing support for tax reform is combining good politics with good policy and is thus, a winning combination.

    Magazine publisher Steve Forbes also proposes to scrap the code. He supports a flat, 17 percent income tax for the right reasons. He explains, correctly, that it is time to replace our nation’s punitive system of taxation with a new plan that is simple, low, fair and honest and that will drive economic prosperity. Because he has a good plan and a lot of money, the other candidates cannot ignore Forbes’ message--even if they wanted to.

    Finally, in a time when more tax revenues are flowing into Washington than politicians expected or budgeted, even the biggest supporters of tax-and-spend government have difficulty voicing outright support for tax increases. However, Vice President Al Gore will not be able to avoid the question of how he will pay for his big government ideas forever. Albeit unlikely, Mr. Gore would be better served to recognize that high profile Democrats have supported tax cuts and tax reform, and that he would be on solid ground if he were to embrace these issues as his own. In 1962, President John F. Kennedy proposed a substantial income tax cut. In 1980, it was democratic presidential candidate Jerry Brown who ran on the flat tax.

    It cannot be ignored that Sen. Bill Bradley has seen his early lead evaporate since he acknowledged support for tax increases. Interestingly, the Senator bases his support for higher taxes on the need for tax simplification. While he has channeled into voter dissatisfaction with the tax code, he picks the wrong solution. His recent statements voicing support for tax reform in the second term of a Bradley presidency indicate that he may have realized his mistake.

    As the presidential hopefuls campaign in the nation’s first primary in New Hampshire, their focus shifts from Iowa, where their job was to prove the political viability of their campaign organizations. Now they must market their ideas to the people in the "live free or die" state. Emphasizing the need for a new tax system that is simple, low, fair, and honest is a silent winner that should be embraced both substantively and rhetorically by all candidates serious about becoming the next president of the United States.