- The Washington Times - Wednesday, February 21, 2007

Virtually all the Democratic presidential contenders say they will raise taxes only on the richest Americans, but their tax increases will likely hit people further down the income scale.

Democrats supposedly learned their lesson when former Vice President Walter Mondale barely carried only one state (his own) in his ill-fated 1984 presidential campaign, after he proposed tax increases on annual incomes of more than $60,000. Now Democrats insist they would raise taxes on earnings of $200,000 a year and up.

But middle-class voters have reasons to be skeptical of such promises that they or their employers would be untouched, because tax increases on the top brackets always have unintended consequences that affect people in the lower tax brackets.

If the Democrats campaign on raising taxes just for those at the top tax rate (now 35 percent under the Bush tax cuts), “it will backfire on them for two reasons,” says economic strategist Cesar Conda, who was Vice President Richard Cheney’s chief domestic policy adviser.

“No. 1, a lot of small businesses, small proprietorships pay the top individual tax rate, so they will be raising taxes on small businesses and entrepreneurs,” Mr. Conda said. While little businesses earning $200,000 or more a year sounds like a like a lot to the Democrats, the people who run them and perhaps employ others hardly consider themselves rich.

“No. 2, a lot of polls I’ve seen suggest that the American people don’t believe that the Democratic tax increases will stop at just the rich, that eventually it will hit the middle class,” he said.

Tax cut crusader Grover Norquist tells us how that would be done. “When they talk about taxing the oil companies, that would be a tax on anybody’s 401(k) retirement plan that invests in Exxon-Mobil stock,” he says. Half of all Americans are invested in the stock market and tens of millions of these workers are middle class.

Even cautious Democrats warn their presidential candidates to be careful in how they define the tax issue, fearing it could hurt their party’s chances in 2008.

“The preconceptions about the Democrats is that they are more likely to raise taxes than the Republicans, so you have to be careful,” said James Kessler, issues director for the Third Way, a centrist-leaning Democratic advocacy organization here.

“Democrats have to define themselves as proponents in the battle for the middle class, so that any tax increases they espouse, like rolling back part of the Bush tax cuts for the wealthy, should be used primarily for middle-class tax cuts,” he said.

But with few exceptions, the Democratic candidates have railed against the Bush tax cuts in general without making any distinctions about the bulk of its across-the-board provisions which reduced taxes for middle-income Americans and those at the very bottom, too.

Worse, their campaign rhetoric hints broadly that their tax targets aren’t just the rich. “Let’s get back to shared sacrifice,” New York Sen. Hillary Rodham Clinton said when she unveiled her tax increase plan to deal with Hurricane Katrina. “We’re going to take things away from you on behalf of the common good,” she told a San Francisco audience in 2004.

In his best-selling book, “The Audacity of Hope,” Illinois Sen. Barack Obama fiercely attacked perceived wage stagnation and income inequality. He said Mr. Bush’s tax cuts “made them worse,” and he would do something about it by raising taxes.

In fact, millions of very low income Americans were removed from the tax rolls by Mr. Bush’s tax cuts, while millions more were put in a new and lower 10 percent tax bracket. How exactly did this make them worse?

Former North Carolina Sen. John Edwards has proposed soaking the rich to finance universal health care, but more sober estimates suggest he would need to target people much further down the income sale to pay for his enormously expensive government plan.

New Mexico Gov. Bill Richardson may be the only exception among the Democratic candidates calling for higher taxes. In his first term, he cut his state’s income tax rates across the spectrum (as Mr. Bush did), cutting the top income tax rate from 8.2 percent to 4.9 percent. It’s not something he brags about before certain audiences. He never mentioned the tax cuts in his speech earlier this month to the Democratic National Committee’s winter meeting, which cheered Hillary’s call for seizing oil company profits and spending it on the environment and other programs.

In their zealous pursuit of higher taxes, Mrs. Clinton, Mr. Edwards, Mr. Obama et al. suggest the rich do not pay their fair share, when in fact they pay the lion’s share.

The top 10 percent of all income earners were paying 67.7 percent of all federal income taxes paid in 2001 when Mr. Bush enacted his tax cuts. By 2004, they were paying nearly 71 percent, according to the Congressional Budget Office and the IRS.

The Democrats’ presidential pack think that’s not high enough. Then they’re coming after the rest of us.

Donald Lambro, chief political correspondent of The Washington Times, is a nationally syndicated columnist.

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