- The Washington Times - Sunday, October 22, 2000

When it comes to presidential debates, reporters are supposed to be eager to expose the whoppers candidate claims that stretch the truth far beyond the breaking point.

Yet the media keep letting one candidate get away with the biggest, nastiest whopper of the campaign. Vice President Al Gore has repeatedly claimed that "nearly half" of Gov. George W. Bush's tax cut would go to the "wealthiest 1 percent." Emboldened by having gotten away with that canard, Mr. Gore upped the ante in the last debate, claiming "most" of the tax cuts would go the rich. And he clarified what he meant by rich, saying that meant taxpayers earning more than $330,000.

Mr. Bush, by contrast, said a fourth of his proposed tax cuts would go to the top 1 percent, who would still pay a third of all income taxes (as they do now). That is entirely consistent with all the official evidence, from the Internal Revenue Service and the Joint Committee on Taxation, which put taxes paid by the top 1 percent at 35 percent and 33.6 percent respectively.

Since the top 1 percent now pay more than a third, and would get only a fourth of the tax cut, the Bush plan is clearly tilted toward more modest incomes. After all, Mr. Bush is only talking about taking the top tax rate down to 33 percent (from between 36 percent and 39.6 percent), which would still be higher than it was when his father was president.

Besides, Mr. Bush would cut taxes by only 7.5 percent, far less than the estimated 28 percent loss of revenues under President Reagan (which soon turned out to be a wild exaggeration).

So where on earth did Al Gore get the idea that "almost half" or "most" of the tax cut would go to the top 1 percent? The answer is that Mr. Gore uncritically accepted figures from the Citizens for Tax Justice (CTJ). That is obvious from Mr. Gore's remark that the top 1 percent consists of those earning more than $330,000 (the exact figure used by the CTJ, and at least 10 percent higher than the official estimates). Citizens for Tax Justice is a 501(c)4 "advocacy" organization union-bankrolled lobbyists, not a nonpartisan think tank.

Ever since 1979, when the top tax rate was 70 percent, the CTJ has lobbied zealously on behalf of punitive taxes on success. CTJ specializes in selling whoppers to gullible politicians, like Al Gore, who do not bother to ask any embarrassing questions about how the numbers were fabricated. If pushed, the CTJ claims the figures just popped out of a "model" from some impressive-sounding "Institute" that just happens to share their address.

That is no more fraudulent, after all, than the numbers themselves. With all their cleverness, however, even the CTJ's affiliated Institute could only manage to allocate 26 percent of the Bush income tax cuts to the top 1 percent, clearly less than their fair (33 percent to 35 percent) share of taxes paid. Even shoving the share up to 26 percent required tossing in such things as relief from the marriage penalty, which does indeed benefit those with high incomes because most high- income families have two full-time workers. In Al Gore's lexicon, though, merely having a high income appears to disqualify these two-salaried couples as "working Americans."

The CTJ's pretense that 43 percent of the Bush tax cuts are "targeted to the top 1 percent" is the source of Al Gore's "almost half" remark. But this has nothing to do with the income tax, since even the CTJ agrees with Mr. Bush that the top 1 percent get less than their fair share of income tax cuts. How did the share going to the top 1 percent jump from 26 percent to 43 percent? By claiming that billions would be lost by eliminating the estate tax, and that the top 1 percent would get 91 percent of that loot. Mix that 91 percent with the 26 percent from income tax cuts and you can fabricate some number like 43 percent. But it is a blatant statistical hoax.

To say people who die with a taxable estate collect the benefits from ending the death tax means this tax cut is somehow enjoyed by those who have died. Actually, death is not the most promising strategy for raising your living standards. You can't take it with you not even a tax cut. In reality, it is younger heirs who benefit from scrapping the estate tax, and heirs are rarely among the top 1 percent of income earners.

Besides, as Doug Bernheim of Stanford demonstrated, clever estate planning likely shrinks receipts from the income tax by more than might be eventually recovered by the estate tax itself. The way you beat the tax is by giving taxable assets to heirs in lower tax brackets while you are alive, and to tax-exempt organizations when you die, with the result that the IRS loses a lot of income tax revenue every year in the often futile hope of catching you with too much left over when you die. The CTJ estimates of revenue lost from scrapping the estate tax is grossly exaggerated; it probably won't lose a dime.

Because the revenue loss from ending the death tax is grossly exaggerated, so too are the related benefits the CTJ whimsically assigns to the top 1 percent, on the loony assumption that dead people can get a tax cut.

Adopting the CTJ's bogus numbers is only one of the devious devices by which Al Gore came up with his infamous line that Mr. Bush would "squander" more money on tax cuts for the top 1 percent than on new (i.e., additional) spending programs. What that comment mainly demonstrates is simply that Mr. Bush does not want to spend a fortune on new spending plans. Mr. Bush thinks the government's old spending programs are costly enough, while Mr. Gore plans to squander 5 times more on all sorts of shiny new spending schemes.

Al Gore likes to toss around a lot of statistics, particularly all this blather about most of the Bush tax cuts going to the top 1 percent. If he really swallows those silly figures, it raises doubts about his gullibility. If he is wise enough to recognize the numbers as what they are crude propaganda from a leftist lobby that raises doubts about his integrity.

The vice president's repeated claim that the top 1 percent would receive a disproportionate share of the Bush tax cuts is emphatically untrue. It is either a foolhardy blunder, in which case Mr. Gore owes Mr. Bush an apology, or it is a deliberate deception, in which case Mr. Gore owes the voters an apology.



Alan Reynolds is director of economic research at the Hudson Institute.

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