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  • Bauer Calls for Flat Tax

    By Jonathan D. Salant
    Associated Press Writer
    Thursday, September 23, 1999; 4:31 a.m. EDT

    WASHINGTON Entering the debate over tax reform, Republican presidential candidate Gary Bauer is proposing to end most deductions and credits and tax most income at a flat 16 percent rate.

    Bauer, who was announcing his "family-friendly" plan today during a speech at the National Press Club, would eliminate all deductions except those for home mortgage interest and charitable contributions, and couple his flat tax rate with a 20 percent reduction in the payroll tax, which funds Social Security. He would not require taxpayers to invest in private retirement accounts, but would reduce projected increases in Social Security benefits for future retirees.

    And he would tax capital gains the profits on the sale of stocks and other investments at the same 16 percent rate as wages and profits.

    By coming out with his own flat tax plan, Bauer focuses on an issue that has been identified with another Republican in the race, publisher Steve Forbes. Forbes, in turn, has tried to reach out to the social conservatives who form the base of Bauer's campaign.

    Earlier this month, Bauer campaign chairman Charles Jarvis defected to the Forbes camp, saying the publisher was only conservative with a chance of defeating GOP front-runner George W. Bush.

    "We want to have a debate not only about social issues and foreign policy, we want to have a debate on his economic vision and our economic vision," said Jeffrey Bell, a senior adviser to the Bauer campaign and national campaign coordinator for former Rep. Jack Kemp's unsuccessful 1988 presidential run.

    "Social conservatives cannot just be gay rights and abortion. It has to include an economic agenda that is comprehensive and credible," Bell said.

    Forbes campaign manager Bill Dal Col said he welcomed Bauer's support of a flat tax.

    "This proves that Steve Forbes can unite the economic and social conservatives of the party," Dal Col said. "Gary has come on board and acknowledged that Steve is the leader on the tax discussions in this campaign as he was in '96."

    Bauer's plan gives taxpayers a credit of $1,400 per person that could be used to offset both income and payroll taxes, unlike current credits that apply only to income taxes. This new credit would replace the current personal exemption, child care tax credit, and other tax credits.

    In addition, businesses no longer could deduct the cost of investments in machinery and equipment.

    "If you want to buy a machine that will make you money, that's great, but you do it after you pay your taxes on this year's profits," Bell said. "The greatest inequity is there is a shelter for huge companies because anything they invest they can wind up writing off."

    But businesses, like individuals, would see their payroll taxes cut by 20 percent, Bell said. In addition, Bauer would eliminate the estate tax, a top priority of the business community.

    © 1999 The Associated Press

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