THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Sunday, December 4, 1994 TAG: 9412010016
SECTION: COMMENTARY PAGE: J4 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 61 lines
On taxes, the new Republican majority in Congress may find itself in a contradiction at best, a hypocrisy at worst.
The party is foursquare against taxes. It wants lower rates on capital gains, increased exemptions for income tax, estate taxes that kick in at a higher point and a variety of other changes.
Some prominent Republicans would like to go beyond lower rates to reform the system. House majority leader Dick Armey favors a flat tax that would eliminate most loopholes. Rep. Bill Archer, who will run the tax-writing Ways and Means Committee, would like to replace the income tax with a consumption tax.
Members of the party have often criticized the Democrats for using the tax code not merely to raise revenues but to pick economic winners and to engage in social engineering. Yet, that's a strategy of the Contract With America. It seeks to jigger the tax code to achieve desired policy ends - just as Democrats have done for years.
Under the rubric of strengthening the family, the contract proposes a tax incentive to encourage adoption and a tax credit to help families pay for dependent care for the elderly.
In order to help the middle class to realize the American Dream, the Contract proposes a $500-per-child tax credit, a repeal of the marriage penalty and the establishment of an ``American Dream'' savings account.
To help seniors, the Contract seeks to lower taxes paid on Social Security and to grant a tax incentive for the purchase of long-term health insurance.
Finally, the Contract proposes a cut in capital-gains taxes and indexing of them along with a variety of incentives for small business that are supposed to create jobs and enhance wages.
Labor Secretary Robert Reich was undoubtedly playing a game of political tit for tat when he suggested that Republicans anxious to cut welfare for the poor ought to be equally willing to get tough with corporate welfare - his name for billions a year in tax breaks, write-offs and other gimmicks that festoon the tax code and favor businesses with the clout to get them written into law.
Partisan motives aside, Reich has a point. So do Armey and Archer when they propose tax reform that would effectively eliminate such loopholes. The hall outside Ways and Means is known as Gucci Gulch because it's where expensively-shod lobbyists gather to seek tax provisions favorable to clients.
Some national purposes may need to be advanced by special provisions in the tax code, but very few. In general, loading up the tax code with bells and whistles is a bad idea. Not only do they complicate tax matters, but every exemption means tax dollars have to be found elsewhere - often the pockets of average taxpayers with no loopholes of their own.
Republicans will squander the moral high ground if instead of simplifying the tax code they use their new power to boost pet projects and favor special interests, also known as campaign contributors. Their goal ought to be not just lower taxes, but a less complicated code that doesn't play favorites. by CNB