House Democrats Call for Radical Tax Code Reform

Recognizing the appeal of sweeping tax reform, senior House Democrats broke with the Clinton Administration on Thursday and joined Republicans in calling for the complete overhaul or replacement of the current income tax.

“It’s time for massive, radical change,” Minority Leader Richard A. Gephardt (D-Mo.) told the Ways and Means Committee.

Gephardt, whose testimony came during the last of three Ways and Means Committee hearings on tax reform, said he would unveil his own proposal next month. He promised “a fundamental overhaul of our entire tax code” to rival such Republican plans as House Majority Leader Dick Armey’s flat-rate income tax and Ways and Means Committee Chairman Bill Archer’s consumption tax.

The Administration presented its critique of the GOP plans on Wednesday but offered no alternative. Assistant Treasury Secretary Leslie B. Samuels conceded there were “many defects” in the current tax system but dismissed the GOP proposals as a “grand experiment” that could disrupt the economy and help the rich at the expense of the poor and the middle class.

Gephardt also sharply criticized the GOP reforms saying: “They offer most of the breaks to the wealthiest Americans, making the overwhelming majority of Americans pay more taxes than they should.”

His own plan will be similar to Armey’s in that it will lower tax rates and eliminate many deductions and credits. But Gephardt said he would continue to tax the wealthy at a higher rate than others, while Armey would impose a single rate on income above basic exemptions for adults and children.

Meanwhile, Rep. Sam Gibbons of Florida, the senior Democrat on the Ways and Means Committee, presented the panel with the details of his value-added tax, which is similar in concept to a national retail sales tax except it is levied at all stages of production.