TAXES: BACK ON TRACK
Shortly after the passage of the big Republican tax cut, almost exactly along party lines, Dick Gephardt fumed, incoherently, that it would "replay a rerun of the 1980s-style voodoo economics." Not true, unfortunately. But the bill may very well be the most pro-taxpayer legislation to pass Congress since the 1981 Kemp-Roth tax cut that launched the ongoing 17-year expansion in the first place.
The hero of this story is retiring Ways and Means Committee chairman Bill Archer, who relentlessly demanded pro-growth tax cuts: a 10 percent cut in the top rate of the capital-gains tax, a gradual phaseout of both the estate tax and the alternative minimum tax, and a one-point cut in income-tax rates (which is at least a modest move in the right direction). The bill would permit taxpayers to deduct a greater share of their private education and health-care expenditures, which would spur more choice and innovation in these cartelized markets. The bill also smartly expands IRA contribution limits from $2,000 to $5,000 a year, at the insistence of Senate Finance Committee chairman Bill Roth.
Particularly admirable is the bill's refusal to genuflect to the idol of "tax fairness" that has reigned over fiscal policy for over a decade. The tax cut is, instead, actually fair. It eliminates or reduces the most unfair taxes in the code, such as the marriage penalty and the double-taxing capital-gains tax. It cuts Americans' taxes in roughly the proportion that they bear the tax burden. No, poor people don't get an income-tax cut in this bill. But then, poor people don't pay federal income tax.
What about the charge of "fiscal recklessness"? Nebraska Democrat Bob Kerrey supplied an inarguable answer: "To suggest we can't afford to cut income taxes when we are running a $3 trillion surplus is ludicrous." Over the next three years, the bill would cut the people's taxes by less than 1 percent. Spending on domestic programs, besides entitlements, would rise by $10 billion a year, as it is scheduled to do now. The small size of the tax cut renders absurd the argument that it would "overstimulate" the economy, whatever that means.
In fact, conservatives might reasonably complain that the bill is too small. But it is, as Democrats have said, a political document; and its passage is a major victory for the GOP and for the cause of reduced and sensible taxation. With this party-line vote, Republicans have once again laid claim to being the tax-cutting party. Media liberals suppose this is risky, but canny Democrats know that it's riskier for them to define themselves as the party that opposes tax cuts. Clinton and Gore claim that they want a tax cut-just a smaller one. Republicans should press on. And if Clinton vetoes this tax cut, as promised, they should just send him another.
