Saturday, December 27, 2003

No other proposal by Howard Dean draws more criticism from Republicans and many of his rivals for the Democratic presidential nomination than his plan to repeal all of President Bush’s tax cuts, including those for the middle class.

The former Vermont governor, who is his party’s front-runner to challenge the president next year, has vowed from the beginning of his campaign that, if elected, he would roll back Mr. Bush’s entire $1.7 trillion in tax cuts, including the child tax credits, the marriage-penalty repeal and the lower income-tax rates.

Few Democrats oppose eliminating the tax cuts for people in the top income brackets — a step that is at the top of their party’s agenda and that all of Mr. Dean’s rivals have proposed.

But others in his party think that it would be political suicide for their nominee to run on restoring the higher tax rates for those in the middle-income brackets — voters who will be pivotal to the Democrats’ chances of taking back the White House next November.

Massachusetts Sen. John Kerry, Connecticut Sen. Joe Lieberman and North Carolina Sen. John Edwards are among Mr. Dean’s opponents who say that his proposal would raise taxes on the people who can least afford it.

“It would have a disastrous impact on families with children,” Mr. Kerry said as he campaigned in Iowa. “Howard Dean thinks the middle class has too much money.”

Also crusading against Mr. Dean’s tax rollback proposal is the Democratic Leadership Council, which helped Bill Clinton win the White House for the Democrats in 1992 by promising to cut taxes for the middle class. Mr. Clinton has told close associates that this is still his position.

“Some in our party still believe that middle-class Americans won’t mind us raising their taxes to pay for programs that poll well,” DLC founder Al From and council President Bruce Reed said in a recent memorandum to party leaders. “We must not forget that our real goal is to expand opportunity, not programs, and that the answer to a Republican administration that has made middle-class incomes stop growing isn’t a Democratic promise to send their taxes shooting up.”

When asked about it, Mr. Dean insists that “there was no middle-class tax cut,” arguing that middle-income people since have been hit by higher taxes at the state and local level, including higher property taxes. He dismisses Mr. Bush’s entire tax-cut agenda as “a scheme to make the rich richer.”

The White House and the Bush campaign counter that Democrats such as Mr. Dean are playing politics and class warfare with the tax-cut issue and that his proposal would hurt the entire economy just when it is beginning to come out of its slump.

“There is no question that the Democrats have a very polarizing message on taxes,” said Terry Holt, chief spokesman for the Bush campaign.

The administration credits its tax cuts for stimulating the economy by putting more money into workers’ paychecks, boosting retail sales, increasing business investment and spurring faster economic growth — 8.2 percent in the third quarter.

“How do the Democrats propose to balance the budget if they are not willing to put forward a proposal to grow the economy, because most people say, without the revenues of a growing economy, the budget cannot be balanced,” Mr. Holt said.

Meanwhile, the White House has had the Treasury Department crunch the tax numbers on Mr. Dean’s tax proposals. Among the examples they cite, if Mr. Bush’s tax cuts were repealed:

• “A married couple with two children and income of $40,000 will see their taxes increase by $1,933 (from $45 to $1,978), an increase of 4,296 percent.”

• “A married couple with two children and income of $60,000 will see their taxes increase by $1,700 (from $2,850 to $4,550), an increase of 60 percent.”

• “A married couple with two children and income of $75,000 will see their taxes increase by $1,700 (from $4,695 to $6,395), an increase of 36 percent.”

Pollster John Zogby thinks that Mr. Dean’s tax plan will not hurt his prospects in a general election.

“From a polling standpoint, the tax cuts were not very popular, especially among Democratic voters,” Mr. Zogby said. “Rolling back the tax cuts and diverting the money to health care or to education is something that will work among loyal Democratic votes. That’s what our polling shows.”

“Very few taxpayers in the middle class have felt a reduction in their taxes because whatever the federal government had given, state and local taxes have taken away,” he said.

However, tax-cut crusader Stephen Moore, who advises Republicans on tax-cut policy, said there is a lot of evidence that tax cuts remain popular with voters.

“Look at the elections we’ve had in the last year alone, where tax increases have been on the ballot in Alabama, Oregon, Washington state and, I would add, the gubernatorial election in California, where the tripled car tax was a big issue in Gov. Gray Davis’ defeat,” he said.

“In each election, the voters have said, we want lower taxes, not higher taxes,” said Mr. Moore, whose group, the Club for Growth, has been running TV ads against Mr. Dean’s tax plan in Iowa and New Hampshire.

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