Lieberman: Tax rebate should include businesses

From Dana Bash
CNN Washington Bureau

WASHINGTON (CNN) -- Sen. Joe Lieberman of Connecticut, the Democratic vice presidential candidate last year, wants to stimulate the economy with a tax plan that would immediately give every taxpayer a $300 check.

But, he said, long-term tax cuts should be focused on businesses as well as individuals.

"A short-term economic stimulus to help lift us out of this economic slowdown has to be followed by business tax credits and smart investments to sustain longer-term growth," Lieberman said.

In what he called a "New Prosperity Agenda," Lieberman told an audience at George Washington University on Monday that he supports a $60 billion "rebate" using this year's surplus dollars.

Unlike others who would return the money to taxpayers by having the IRS adjust withholding tables, he would like to see a $300 check go to "every member of a family who worked last year."

As for future surpluses, Lieberman, like his fellow Democrats, called for dedicating one-third for debt reduction and one-third for key spending initiatives.

But in a sharp departure with what President Bush and his fellow Democrats are proposing -- tax relief only for individuals -- Lieberman said the best long-term investment in the economy is to put the final third of surplus dollars toward tax breaks for businesses.

"The final one-third should be dedicated to tax reduction -- some to reward working families and the rest to business tax cuts that stimulate economic growth and new jobs," Lieberman said. "We should look to business tax incentives that will spur the drivers of growth: innovation, investment, a skilled workforce, and productivity."

Specifically, the senator called for a reduction in the capital gains rate, elimination of capital gains taxes for long-term investments in start-up firms, tax credits for businesses that invest in information technology, and research and development.

He did not break down how much of his overall tax cut would go to individuals versus businesses.

By contrast, Bush has told business lobbies to stay away from his tax-cut plan, concerned it would become a "Christmas tree" weighted down by ornamental business provisions.

Lieberman, who has hinted at his own ambitions for a White House bid in 2004, called Bush's $1.6 trillion tax cut plan misguided.

The Democratic senator was criticized by centrist Democrats during the presidential campaign for abandoning his middle-of-the-road views in exchange for the populist pitch of Al Gore.

This speech, aides say, laid out the "New Democrat" agenda and message.

"The Bush plan is a tax plan, not a prosperity plan," the Connecticut Democrat said. "The Bush plan cannot answer the big questions of what kind of country we want to be 10 years from now, because it does not ask the right questions. It lacks vision and therefore squanders this moment's opportunity.

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