Tax rift among Democrats

Democratic presidential contenders, in an ironic twist, are fighting about whether some of President Bush’s tax cuts should be retained or repealed.

Former Vermont Gov. Howard Dean wants all of Mr. Bush’s tax cuts rolled back. Mr. Dean wants to re-establish the higher tax levels of Bill Clinton’s administration (when the top marginal income tax rate was nearly 40 percent), using the money to pay for increased health-care coverage.

But Mr. Dean’s chief rival for the nomination, Massachusetts Sen. John Kerry, says not all of Mr. Bush’s tax cuts are bad — especially those aimed at the middle class, married people with children and two-earner working couples.

Liberal Democrats such as Mr. Dean have opposed Mr. Bush’s tax cuts from the beginning, saying they largely benefit the rich. In fact, when measured as a percentage of incomes, the bulk of the tax rate reductions are aimed at workers who are far from rich: middle- to-upper-middle-income swing voters who have been moving into the Republican column.

Mr. Kerry has also been among those who never passes up the opportunity to take a swing at Bush’s tax cuts and play the class-warfare game. But last week, in an abrupt switch, Mr. Kerry defended some of the tax cuts and attacked Mr. Dean for saying he will campaign on repealing all of them if he becomes the Democratic presidential nominee.

“Real Democrats don’t walk away from the middle class,” Mr. Kerry said in a speech in Dover, N.H., last Wednesday. “They don’t take away a tax credit for families struggling to raise their children, or bring back a tax penalty for married couples who are starting out, or penalize teachers and waitresses by raising taxes on the middle class.”

Mr. Kerry wants to drive a wedge within the party on the 2004 election’s most pivotal economic issue. He also wants to persuade independent swing voters who have fled his party that he is not a knee-jerk tax-and-spend lefty like Mr. Dean.

The senator seems to be saying the Democratic Party used to be the party of the middle class, and that Dean Democrats risk further alienating this critical demographic group if they again run on raising taxes — as Walter Mondale did in 1984.

And that’s exactly what Mr. Dean, who is tied for first place in Iowa and New Hampshire, would end up doing. The reason: Mr. Bush’s economic stimulus plan, enacted this spring, has already lowered the tax rates scheduled to decline in 2004 and 2006. Repealing them would mean raising everyone’s taxes, including those in the lower tax brackets who are pivotal to the Democrats’ dreams of recapturing the White House.

But there are other provisions in Mr. Bush’s accelerated tax cut that Mr. Dean would also end up terminating: a doubling of the per-child tax credit to $1,000 for all but the wealthiest families; and eliminating the marriage penalty in which a two-earner couple is forced to pay more in income taxes than if they had filed separately. These provisions alone benefit middle-income taxpayers who will likely determine who will win the presidency next year.

Mr. Dean, campaigning in Iowa, shot back at Mr. Kerry that “Real Democrats don’t make promises they can’t keep.

“Working Americans have a choice,” he said. “They can have the president’s tax cuts or they can have health care that can’t be taken away. They can’t have both.”

It was a weak response that seemed to say to workers that, if Mr. Dean is elected president, the tax payment withholding in their paychecks is going to go up. Workers will have less take-home pay, but he’s going to give them a lot of other government benefits to make up the difference.

Mr. Kerry’s decision to attack Mr. Dean on the tax cuts comes straight out of the Democratic Leadership Council’s campaign playbook Bill Clinton scrupulously followed in 1992.

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