Ad to Accuse Bush of Tax Loophole Ploy

An independent political action committee is scheduled to begin airing television advertisements today accusing President Bush of exploiting a loophole to substantially reduce his personal tax bill over the past decade.

The ad--a copy of which was provided to The Times--attempts to move toward center stage an issue which has rumbled around the periphery of the presidential campaign all year: whether the President has tried to avoid state income taxes in Maine, where he maintains his Kennebunkport family home, by claiming legal residence in Texas, which has no state income tax.

Bush does not own a home in Texas; he sold his Houston residence in 1981 after he was elected vice president and purchased the Maine house from his aunt. At that point, he claimed Kennebunkport as his principal residence--which would have allowed him to avoid paying capital gains taxes on the sale of his Houston home--but the IRS rejected his argument.

Now, he maintains a Houston hotel room as his legal address for voting and tax purposes. To settle a legal challenge to his voting status in Texas, Bush said in 1985 that he intends to build his retirement home on a small vacant lot in Houston after leaving office.

By claiming his residency in Texas rather than Maine, Bush has avoided paying more than $200,000 in Maine state income taxes since 1981, the ad maintains. “For 11 years, George Bush has been less than honest,” the ad asserts.

The ad, sponsored by a newly formed organization called the Independent Committee on Ethics, will run through Friday in five key battleground states--Pennsylvania, New Jersey, Ohio, Michigan and Illinois. Though the group has raised only enough cash to fund a relatively modest purchase of air time, it hopes “to raise a great deal of money” for further buys, said Santa Monica-based media consultant Bill Zimmerman, who produced the ad with his partner, Pacy Markman.

When these accusations first surfaced earlier this year, the White House said the President claims his legal residence in Texas not to avoid taxes but because of longstanding business and personal ties. Asked Tuesday about the allegations of tax avoidance, Torie Clarke, Bush’s campaign spokeswoman, said such charges were “absolutely false and ungrounded.” The President, she added, pays property taxes on both his Maine compound and Texas lot, and considers “Texas his home.”

But critics argue that Bush spends much more time, and owns a more substantial property, in Maine and thus is more rooted there than Texas for tax purposes.

The group that placed the ads was formed in early August, said spokesperson Lucy McCoy, a Los Angeles public relations consultant. It has three co-chairs: former Texas Agriculture Commissioner Jim Hightower, former Texas state legislator Frances T. Farenthold and Maine state Sen. Stephen M. Bost, a co-chair of the legislature’s Joint Standing Committee on Taxation.

All three are Democrats, though Bost heads up an ongoing Maine organization of Ross Perot supporters. In an interview, Hightower said, “We are in no way saying there is anything illegal about what Bush has done; we are saying there is something heavily sleazy about this. . . . It’s a character issue.”

Clinton aide George Stephanopoulos said Tuesday that the Democratic campaign had no comment on the ad.