Putting candidates' tax plans to the test

Bob McIntyre is often a nuisance to politicians, especially Republicans.

The director of Citizens for Tax Justice - and some other liberal think-tank officials - frequently point to flaws in plans the politicians proudly announce.

For instance, each time a presidential candidate or the congressional leadership comes up with a tax-cutting plan, Mr. McIntyre does an almost instant analysis of who gets the benefits. The results can be awkward politically.

On Dec. 1, GOP presidential candidate George W. Bush proposed a plan to slash tax revenues by more than $1.7 trillion over 10 years, $483 billion over five years.

The same day, McIntyre issued an analysis saying two-thirds of the tax cuts would go to the best-off 10 percent of Americans. Taxpayers in the bottom 60 percent of the income scale would get only 11 percent.

Hmmm!

Accentuating the nuisance factor, Republican candidate John McCain cited McIntyre in attacking the Bush tax plan. Then on Jan. 11, the Arizona senator offered his own more-modest plan. It cuts taxes $223 billion over five years.

Again McIntyre's 10-person, Washington research shop cranked out an immediate analysis. It notes that Senator McCain's plan would provide little or no benefits to three-fifths of all taxpayers, those who earn less than $39,000 a year. More than half of the benefits go to the 15 percent of taxpayers making between $65,000 and $130,000 a year. But the plan offers little to the 1 percent of taxpayers who make more than $319,000.

"Some people feel we are completely dispensable," McIntyre notes laconically. Democratic candidates Al Gore and Bill Bradley have not offered detailed tax-cut plans. But if they do, McIntyre promises an analysis.

Jeff Faux, head of the Economic Policy Institute, another liberal-leaning think tank in Washington, also is often considered something of a political pain in Washington.

Last week, for instance, the EPI together with the Center on Budget and Policy Priorities reported that the booming stock market has widened the income gap between the poorest and richest American families.

Average earnings of the poorest fifth of families rose less than 1 percent between 1988 and 1998 - to $10,770. They jumped 15 percent for the richest fifth of families - to $152,350. (See chart, Page 12.)

"Some people don't like to hear that," says Mr. Faux. Rather, they like to think that the economic expansion and rising stock prices have been enriching everyone, that capitalism produces an appropriate distribution of income for Americans.

Faux has 10 PhD economists crunching statistics. They find that income disparities are growing - not shrinking.

"Things work best when there is some balance," says Faux. "The distribution of income and wealth - and therefore of economic power and therefore of political power - is very important in a democracy."

Faux cites a friend: "When rich people run out of things to buy, they buy politicians." So the piling up of wealth by the rich, he says, "is not an unimportant problem," especially in an election season.

McIntyre is a fan of the progressive federal income-tax system - one that proportionately taxes the well-to-do more than the poor. It, he argues, offsets the regressive nature of most state and local taxes and the payroll tax for Social Security, which has a cap on income subject to this tax.

"The progressive tax system can smooth out the rough edges of capitalism," he says.

Think tanks perform a special role in Washington.

Like McIntyre's CTJ, the Treasury Department and the Joint Committee on Taxation of Congress have computerized programs capable of performing a similar analysis of any tax proposal.

But the Treasury feels constrained not to appear too political by analyzing the tax cut proposals of candidates.

The joint committee has two Republican bosses, Sen. William Roth of Delaware and Rep. Richard Armey of Texas. The staff doesn't do an analysis without their approval.

So McIntyre gets calls from members of Congress seeking tax information or analysis they can't get from the official sources. He usually helps them.

The usual rebuttal to a CTJ report showing the prosperous get the most benefit from a tax-cutting plan is that upper-income people pay the bulk of incomes taxes and that the poor pay little or nothing. So it follows that the well-to-do benefit most.

McIntyre, though, maintains that a plan could be devised to help low-income Americans. He suggests that the earned-income tax credit and the minimum wage could be raised. Also, the payroll tax that the working poor do pay could be trimmed.

(c) Copyright 2000. The Christian Science Publishing Society