Boxer Commercial Assails Herschensohn’s Flat-Tax Plan

Democratic Senate candidate Barbara Boxer began airing three new television ads Wednesday. One pledges her support for increased spending on education and another criticizes her Republican opponent, Bruce Herschensohn, on a variety of issues, including his support for offshore oil drilling and his opposition to abortion rights. The third and most hard-hitting ad attacks Herschensohn’s proposed federal flat tax.

THE AD: The flat tax ad opens with a photograph of Herschensohn while an announcer quotes an analysis by the Citizens for Tax Justice asserting Herschensohn’s flat-tax proposal would take away home mortgage deductions and raise taxes for nine out of 10 families. A family making $26,000 a year, it goes on to say, would face a 54% tax increase while those making $1 million a year would be treated to a 33% tax cut. “The middle class pay more, the rich pay less,” the announcer says. It concludes with Boxer speaking into the camera: “Let’s give the middle class a break. Don’t you think the millionaires are doing just fine?”

THE ANALYSIS: Since the early 1980s, Herschensohn has supported a proposal by Robert E. Hall and Alvin Rabushka to replace the current federal income tax with a simplified flat wage tax system, which would assess corporations and individuals at a 19% rate (the very poor would be exempted). The two campaigns have waged a battle of experts over the merits of the proposal, with both sides claiming the support of Nobel economists, among others.

By all accounts, Herschensohn’s plan would ultimately eliminate the home mortgage deduction, but that tells only part of the story. The plan also calls for a lengthy transition period for current homeowners, is based on the expectation that interest rates would drop dramatically without the deduction, and would eliminate a variety of other taxes, including those on capital gains and interest and dividend income.

The Citizens for Tax Justice, a Washington-based policy group backed by labor and public-interest organizations favoring middle-class tax relief, has criticized the plan as favoring the rich. Herschensohn’s campaign points to tax tables calculated by authors Hall and Rabushka in 1985 that show a family of four--at any income level--would pay less under their plan. But even those tables show that wealthier families would receive greater relief, with a family earning $25,000 saving just $18 in taxes and a family earning $80,000 saving $4,768.