- The Washington Times - Friday, January 14, 2000

Arizona Sen. John McCain's eagerly awaited tax-cut proposal, which the Republican presidential candidate unveiled Tuesday, was very long on rhetoric but very, very short on substance. On the rhetorical side, Mr. McCain used the words "conservative" or "conservatism" a dozen times to describe his plan during his 20-minute speech outlining its details. In terms of weight, however, one would need a microscope to locate Mr. McCain's "conservative" tax cut in the flood of tax payments that are scheduled to overwhelm Washington during the next five years.

Mr. McCain's plan offers $237 billion in tax cuts over the next five years, a relatively insubstantial sum in its own right. But then his plan takes away nearly two-thirds of that total by calling for $151 billion in tax increases, or loophole closures. Thus, his "conservative" plan would produce a minuscule $86 billion net tax cut over five years. During a period when cumulative federal tax revenues will approach $11 trillion, or an average of $2.2 trillion per year, how "conservative" is an $86 billion cut that averages $17.2 billion annually? It's three-quarters of 1 percent. And it represents less than 20 percent of the non-Social Security surplus that the Congressional Budget Office has projected over the five-year period. In other words, Mr. McCain's tax-cut plan would keep more than 80 percent of the non-Social Security surplus in Washington, where, as night follows day, Congress would surely spend it.

By a wide margin, Mr. McCain's plan is far more Clintonesque than Reaganesque, no matter how much he seeks to dress it up in conservative rhetoric. Contrast his refusal to reduce the top marginal income-tax rates with his commendable voting record in the past. In 1986, Mr. McCain voted for President Reagan's tax-reform legislation that reduced the top marginal income-tax rate from 50 percent to 28 percent. In 1990, determined to force President Bush to keep his "no new taxes" pledge, Mr. McCain voted against a bill that increased the top marginal rate to 31 percent. In 1993, he voted against President Clinton's proposal that added two higher marginal rates, 36 percent and 39.6 percent. All of these votes were cast during periods of deficit spending. Now, with massive surpluses on the horizon, Mr. McCain cannot muster the courage to reduce even the 39.6 percent rate. Worse, he has repeatedly resorted to the class-warfare rhetoric that heretofore had been the sole province of the Democratic Party. In debates and on the stump, Mr. McCain has pilloried Texas Gov. George W. Bush's plan, which includes a rather modest proposal to reduce the top rate to 33 percent, which happens to be 2 percentage points higher than than the top rate Mr. McCain opposed in 1990 and 5 percentage points above the rate he voted for in 1986.

Apart from the inadequacy of his $86 billion net tax cut, Mr. McCain's plan does have some good ideas. He would increase the amount of taxable income subject to the lowest 15 percent tax rate to $70,000 for couples filing jointly and to $35,000 for singles. This move, coupled with his proposal to increase the standard deduction for joint filers, would virtually eliminate the marriage penalty. He would exempt military personnel stationed abroad from income taxes altogether. Like Mr. Bush, he would double the child tax credit to $1,000. There are provisions to expand education and medical savings accounts. And his plan would permanently ban sales taxes on Internet purchases.

While increasing the exemption from the death tax to $5 million from the current $675,000, however, Mr. McCain presumably believes that the government deserves first dibs on any estate valued above $5 million, as if that wealth hadn't already been taxed as it accumulated. It would be far better to eliminate the death tax, as Mr. Bush has proposed. For all his class-warfare rhetoric, conspicuously absent from Mr. McCain's meager plan is any proposal to reduce the 15 percent tax rate for the 70 million taxpayers who are already in that bracket.

Given Mr. McCain's 1998 attempt to increase cigarette taxes $1.10 per pack in his ill-advised anti-tobacco legislation that would have raised taxes by $516 billion and given his anti-Republican, anti-free speech campaign-finance-reform proposal, it should not be surprising that Mr. McCain's tiny tax-cut proposal resembles something Al Gore would be pleased to call his own. That's the problem, and it clearly is not an isolated one.

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