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Analysis: Bush tax plan would leave little room for new spending
December 1, 1999 WASHINGTON (CNN) -- The tax plan unveiled by Texas Gov. George W. Bush is based on mainstream economics but the massive cuts would delay paying down the national debt and by design would leave little or no money for other spending. While Bush promises relief for the working poor -- the fact is his income tax cut would give no relief at all to the millions of working families who earn too little to pay income taxes, but who do pay payroll taxes -- for Social Security and Medicare. So his plan offers no help for roughly 20 million working families, the bottom 22 percent.
But above the lowest income levels, Bush, the front-runner in the 2000 Republican presidential race, would help everybody. "We need a tax system that makes it easier, not harder, to join the ranks of the middle class," Bush said. Bush claims another 6 million lower-income families will be relieved of federal income tax -- joining those other 20 million. Currently a family of four starts paying income taxes when income reaches $24,900 a year. Bush said under his plan, those taxes would start at $36,500. A single mother with a child now pays taxes on income above $15,200 and Bush said his plan would move that up to nearly $22,000. In percentage terms, the rich would get a smaller cut in their income tax rates than those at the bottom. But in dollar terms, the rich pay vastly more taxes now and would naturally get the most relief. "Governor Bush's plan looks remarkably like the tax plan that was passed by the Congress last summer and was vetoed by the president on the grounds that it was targeted to rich people, and cost way too much," said Bob McIntyre of Citizens for Tax Justice. An analysis of Bush's plan by Citizens for Tax Justice shows that taxpayers in the middle range of income -- averaging about $30,000 a year -- would get an average cut of $501 when fully phased in. But those in the top 1 percent -- making an average of $837,000 a year -- would get an average cut of more than $50,000 a year. Paying for such huge cuts depends mainly on how fast the economy grows. Bush's plan assumes growth rate of 2.7 percent per year, a bit higher than the 2.5 percent growth prediction issued by the Congressional Budget Office last July. But both estimates are far below the astonishing 5.5 percent growth rate actually posted last quarter and in line with what private economists are currently forecasting. If Bush becomes the GOP nominee, Ron Brownstein of the Los Angeles Times said his tax cut plan would offer a sharp ideological distinction between the GOP and Democrats, unlike other issues like education and social policy where Bush has worked to narrow the differences between the two parties. "Here is a case where on this core issue where he is instead polarizing again and widening," Brownstein said. "This is a large tax cut plan, much larger than anything the Republicans in Congress have offered, and it offers a clear distinction with Democrats, whether Bradley or Gore, who are going to say that most of the surplus should be used to spend on new programs, whether it's Medicare, health care or education. Brownstein also said the plan is the first indication that Bush is worried about the Republican primary. Tax cuts are a staple of GOP primaries and are expected by conservative voters. "This may be the first major proposal he has offered that is aimed at his core primary voters rather than a general election audience," he said. The cuts offered by Bush are larger in percentage than the 1996 GOP nominee Bob Dole, Brownstein said, and the plan may help Bush pre-empt criticism from the right-wing that he is blurring the differences between the GOP and the Democrats too much. "On the other hand, the price of that is that may be more shoot at in the general election for the Democrats in this plan," he said. Brownstein said Bush has some work to do to convince voters that tax cuts are needed, noting that most polls show people prefer the government surplus be used on programs like Social Security and Medicare instead of funding tax cuts. "So he's got an environment in which you don't really have a bonfire burning, a grassroots demand for tax cuts," Brownstein said. "He's going to have to go out and make that case because otherwise Democrats are going to be able to go out and say, 'Look, this will endanger programs that you care about.'" CNN's Brook Jackson contributed to this report. |
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MORE STORIES:Wednesday, December 1, 1999
• Analysis: Bush tax plan would leave little room for new spending • Clinton urges greater openness in trade talks • McCain lays out international policy priorities • NHPrimary.com: Gore calls challenge from Bradley a shot in the arm • NHPrimary.com: Gore draws stark line between roles as vice president and candidate • Clinton brother to sing in North Korea • Seeking votes, Gore cites good economic times for black America • Forbes ad takes on Bush over Social Security • Ex-Democratic official admits making illegal donations to N.J. senator • Mississippi governor's race could lead to changes in state Constitution • Giuliani, from afar, defends homeless policies • Bradley campaigns on the Internet • Washington Monument to close for final stage of repairs • Activists give Clinton administration an 'F' for HIV prevention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
CNN's Brooks Jackson looks at the nuts and bolts of Bush's tax plan
