We take serious exception to The Post's Dec. 2 editorial on Gov. George W. Bush's tax plan. Bush's careful and deliberate establishment of priorities is exactly what voters should expect from the next president of the United States. His tax-cut plan repairs some of the most serious inequities and growth disincentives that have built up in the tax code.
The Post asserted that the tax plan would benefit only a small slice of the population. The fact is the plan would remove about 6 million low- to moderate-income families from the tax rolls. It would reduce income tax liabilities for taxpayers earning less than $50,000 by an average of 27 percent. For those earning between $50,000 and $100,000, the average income tax cut would be 15 percent. And for those earning in excess of $200,000 the tax cut would be less than 10 percent.
Bush's first priority is to reduce the barriers facing families trying to enter the middle class. Families earning below $30,000 often face tax rates on additional earnings approaching 50 percent. A family with two children and an income of $25,000, for example, pays a 15 percent income tax rate, a 7.65 percent federal payroll tax rate and loses 21 cents of earned income credit with each additional dollar of earnings. And this is just the federal tax bill. This is bad economic policy and bad for our society. Hard-working men and women do not need to have government stand like a toll collector barring their access to the middle class.
By cutting the bottom tax rate to 10 percent, one-third below its current level, and doubling the child credit to $1,000, Bush reduces federal marginal tax rates by about one-third for 4.5 million families. He would eliminate income taxes completely for a family of four with an income under $36,000 and for single parents raising two kids on an income under $31,000.
The Post laments the fact that the Bush plan would also benefit taxpayers with higher incomes. Apparently, The Post has decided that having high barriers to enter the middle class is an acceptable price to pay in order for maintaining high taxes on the well-to-do. We reject the notion that high taxes are appropriate for anyone, be they single parents trying to raise their children on a modest income or a successful entrepreneur creating the jobs and wealth that make our economy second to none. When government comes to presume that it is an equal partner with the success of its citizens, society is in trouble.
Bush's plan sets 10 hours' wages a week as the limit for middle-class taxation and four months a year as the limit for taxes on our most successful entrepreneurs. Ideally, even these levels should be cut. We need to restore the concept that the money people earn through their labor, their creativity and their willingness to take risks rightfully belongs to them, not to the government.
Bush also believes that tax policy should reflect our social goals. That is why his tax plan is family-focused, with sharp reductions in the marriage penalty the income tax imposes on two-earner couples. He also has committed to extending the deductibility of charitable contributions to the 70 percent of taxpayers who do not now itemize their returns. Strengthening the family and the voluntary associations that underpin our civil society is certainly an appropriate goal for government.
The Post's editorial charges that these ideas are economically risky. Let's set aside our philosophical disagreement with the notion that letting people keep more of the money they earned is somehow risky. Bush's plan involves an estimated static revenue reduction of $480 billion over five years. By contrast, the Clinton administration proposes spending increases on new programs and expansions of existing programs totaling $460 billion over the same five-year period. The Post was notably silent about this new spending. Would readers be wrong to infer that The Post believes tax cuts are economically risky but an equal increase in government's spending promises is not?
Finally, The Post alleges that the governor's plan requires deep cuts in existing programs. Our projections show that no such cuts are required. We expect on-budget surpluses totaling $586 billion during the same five-year period that Bush's tax package reduces revenues by $483 billion. Furthermore, if this charge were true, it seems to us that the president's spending proposals would require similar program cuts.
Far from offering something risky, Bush has proposed a comprehensive set of tax reforms that easily fits within realistic and responsible budget projections. His plan provides a thoughtful, careful and detailed fiscal vision on which America can build an even stronger basis for our economy in the next decade.
John F. Cogan, of the Hoover Institution, and Lawrence B. Lindsey, of the American Enterprise Institute, are economists who are serving as advisers to George W. Bush.