Bush's tax plan: long on cuts

Candidate's proposal spreads tax breaks widely, but doesn't overhaul

Voter surveys consistently report that cutting taxes is a low-priority issue in the 2000 election.

But that matters not to Texas Gov. George W. Bush, the front-runner for the Republican presidential nomination, who announced yesterday a bold proposal to cut income and other taxes.

Cutting taxes is a fundamental piece of Republican orthodoxy. So for Governor Bush, the question was not if, but how. And in proposing a plan that offers something for most voters, while steering clear of a fundamental change in the way the American government taxes the populace, Bush is demonstrating the pragmatic streak that has become a hallmark of his leadership in Texas.

"It's the difference between campaigning and governing," says William Gale, a tax expert at the Brookings Institution here. "As the front-runner, he's got to make policies that would be plausible if he were actually elected."

For now, Mr. Gale says, the other Republican candidates - most of whom favor a flat tax, a radical departure from the current system - don't face that constraint.

Still, Bush's plan is expected to raise hackles within the GOP, especially the conservative wing, and was receiving harsh Democratic criticism even before the details were out.

Elements of the plan

The Bush proposal would:

*Replace the current five tax rates - 39.6 percent, 36 percent, 31 percent, 28 percent, and 15 percent - with four rates, 33 percent, 25 percent, 15 percent, and 10 percent. The cuts would be phased in gradually over five years.

*Double the child tax credit to $1,000, and reduce the so-called marriage penalty.

*Phase out taxes on large estates.

*Create a new tax break for families who send their children to private elementary and secondary schools.

The plan does not cut capital-gains taxes, a feature that conservatives are expected to criticize. The proposal also represents an effort by Bush to add some meat to his slogan of "compassionate conservatism;" campaign aides say that about half of the plan's benefits will be aimed at helping middle- and lower-income taxpayers.

"This is the essence of compassionate conservatism - trusting people to spend their own dollars more than trusting the government to spend their dollars for them," says Whit Ayres, a GOP strategist based in Atlanta, who is not affiliated with the Bush campaign. "This takes a significant step down that road."

Mr. Ayres notes with particular admiration the piece of the plan that allows a deduction for charitable contributions for people who don't otherwise itemize deductions.

Other Republicans may not be so complimentary of the Bush plan, which falls well short of an overhaul of the tax code. In particular, as Bush faces a mounting challenge in New Hampshire - which holds the nation's first primary vote, Feb. 1 - from Arizona Sen. John McCain for the Republican nomination, the question is whether GOP "base" voters will be angry at the Texas governor.

"That's the big question," says Marshall Wittmann, a Republican political analyst at the Heritage Foundation here. "If primary voters are looking for a promise of a tax overhaul, and that's not satisfied, that could potentially hurt him."

Bush, evidently, is banking on his strong air of inevitability in his battle to win the Republican nomination. Nationally, he still polls well ahead of the rest of the GOP field, and his vast campaign war chest puts him in excellent position to beat the other candidates.

His economic proposal, in part, seems to represent an effort by Bush to put his campaign on a general-election footing even before the first caucuses and primaries have been held. He appears to be aiming as much for Democratic voters, as well as the growing proportion of independents, as for his own Republicans, analysts say.

Gore calls plan 'irresponsible'

Vice President Gore, the front-runner for the Democratic presidential nomination, attacked the Bush plan before it had been announced, calling it fiscally irresponsible. Gore also created his own headlines this week by embracing the Clinton administration's economic policies, which he claimed were responsible for the current economic prosperity. Gore has, of late, been mostly distancing himself from the Clinton record.

But Gore's assertions point up a central problem for the Republicans in their effort to retake the White House after eight years on the outside: to convince voters that big tax cuts are a proper use for the large budget surplus that's been projected. When asked in polls if they want reduced taxes, voters tend to say yes. But when given a choice of tax cuts vs. increased spending on health, education, and the environment, the latter wins. And the two Democratic candidates propose plenty of spending in those areas.

(c) Copyright 1999. The Christian Science Publishing Society