- The Washington Times - Wednesday, December 8, 1999

“I do not accept the assumption that it is somehow risky’ to let taxpayers keep more of their own money. What is risky is when politicians are given charge of a surplus. There is a strong temptation to spend it. And, in Washington, that temptation is overwhelming.” So said George W. Bush, the Texas governor and presumed Republican presidential front-runner, in proposing a $483 billion tax cut during a campaign stop in Iowa last week.
The temptation to defend the status quo is also overwhelming. On cue, Vice President Al Gore attacked the plan as “truly reckless,” a charge Mr. Bush obviously anticipated. A spokesman for Mr. Gore further complained that the plan “benefits the wealthy,” as though allowing workers above a certain income bracket to keep their own money amounts to some sort of special-interest government entitlement.
From the right, Mr. Bush’s fellow Republican presidential contenders said the plan was too “timid.” Sen. Orrin Hatch complained the plan left taxpayers under the “oppressive burden” of the Internal Revenue Service. But because most Americans pay taxes through federal withholding at their jobs, they rarely have to confront that oppression directly. That fact invariably mutes public enthusiasm for tax cuts, as was the case in Congress this year.
The test for Mr. Bush was to reconcile in his proposal the principles he articulated above and the political prospects for reform. The result was a little something for everyone, not exactly the strongest rallying cry one has ever heard but an eminently reasonable, even desirable, political model.
He would, among other things, cut income-tax rates across the board. Rather than have five tax brackets ranging from 15 percent to 39.6 percent, Mr. Bush favors four ranging from 10 percent to 33 percent. In effect, he would simply drop some 6 million people from the tax rolls; a family of four making $35,000 a year would receive a 100 percent tax cut. For those at the top of the income brackets those making $200,000 annually and more the percentage reduction would be far smaller at 9.7 percent. But in either case, the cuts would reduce the punishment taxes exact on those who try to work themselves into a better life.
High marginal tax rates, said Mr. Bush, act as a “tollgate” on the road leading persons out of poverty into the middle class. Why work hard to get ahead when the reward is to pay ever greater taxes to the federal government? They also, he said, “inhibit entrepreneurial activity because they act as a success tax, claiming a larger share of income from flourishing enterprises, while the government shares little of the risk of loss.”
So-called death taxes act as a “success tax” because they penalize workers who seek to pass on the benefits of their labors to their survivors. Mr. Bush wants to eliminate the death tax. The Social Security earnings test acts as a “success tax” because it reduces seniors’ benefits for each dollar they earn. Why sanction seniors for working? Mr. Bush would junk the earnings test. The marriage penalty is a “success tax” because it forces dual-earner families to pay higher tax rates. Mr. Bush would give these families greater tax deductions.
There is much more to the Bush plan, but it is clear that on the whole his approach is an incremental rather than a revolutionary one. Like Gov. Jim Gilmore in Virginia, who phased out the “car tax,” Mr. Bush would cut taxes in phases. If workers postpone their enterprise until they can enjoy the full benefit of the cut, as happened with the Reagan tax cuts, Mr. Bush might find incrementalism hurts rather than helps economic growth. But he could do much worse. He could leave the success tax right where it is.

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