Gingrich Calls for Eliminating Some Taxes

In a bold challenge to conservatives who complained that he was going soft on tax cuts, House Speaker Newt Gingrich (R-Ga.) said Wednesday that he wants to eliminate capital gains and estate taxes.

“I favor a zero tax on savings and job creation,” Gingrich said at a Republican press conference on limiting tax increases. “We’re for zero tax on death benefits.”

Gingrich’s pronouncement was the latest in a blizzard of speeches, press conferences and other initiatives as he has mounted an aggressive effort to reassert his leadership after months of trying to repair the damage inflicted by a prolonged ethics investigation.

Gingrich has faced heavy criticism from Republicans who think he has strayed too far from the conservative party line, especially when he said that he might favor postponing action on tax cuts until after Congress passes a balanced budget. Now, he is trying to build on the largely favorable reviews he got for his tough talk to Chinese officials during his recent visit to Asia.

Some of his erstwhile critics are encouraged. “He is aggressively reasserting himself,” said Rep. Joe Scarborough (R-Fla.). “He was responding to the pressure from antitax Republicans.”

Gingrich launched his comeback drive this week with a schedule packed with major speeches--including one Monday night before GOPAC, the political action committee he once headed, where he delivered his most pointed criticism to date of the questionable Democratic fund-raising practices. He gave another version of that spirited talk in a closed-door meeting with House Republicans on Wednesday.

And after spending months dodging reporters who keep asking when and how he will pay the $300,000 ethics penalty he owes, Gingrich attended two press events Monday (while continuing to decline comment on the penalty).

He made his tax comments at a press conference promoting a constitutional amendment that would require a two-thirds majority vote in Congress to raise taxes--a measure that GOP leaders plan to bring to the House floor on tax day, April 15.

But Democrats were quick to criticize Gingrich’s call for abolishing estate and capital gains taxes. White House spokesman Mike McCurry called it a “charm offensive underway with the far right,” and House Minority Leader Richard A. Gephardt (D-Mo.) said that Gingrich’s “tax giveaway” would cost $40 billion, “an expensive admission ticket to buy his way back into the hearts of the conservative wing of his party.”

If Gingrich brought the ideas up in the context of current budget talks with the administration, McCurry said, “we will certainly be receptive and listen and see how that fits into the contours of a balanced budget and see what trade-offs exist in making those kinds of agreements.”

But Gingrich spokeswoman Christina Martin said that the speaker advanced the idea not so much as a bargaining position for the current budget debate but as a vision of where the GOP should go in an upcoming, longer-term debate on overhauling the tax code.

“Newt was setting forth a vision and direction in his remarks today as ends toward which the party will work,” said Martin.

Republicans have promised to debate a major overhaul of the tax code, but they are divided over how to do it. Some, led by House Majority Leader Dick Armey (R-Texas), want a flat tax. Others, led by Ways and Means Committee Chairman Bill Archer (R-Texas), want to scrap the income tax system entirely and institute a national sales tax.

Under current law, individuals pay taxes of up to 28% on capital gains, proceeds from the sale of a home, stocks or other assets. The tax is expected to bring in more than $35 billion in revenues this year. Republicans in the last Congress proposed changes that would, in effect, lower the top rate to 20%. President Clinton’s far more modest proposal would cut the capital gains tax only on the sale of a home.

The estate tax on a dead person’s assets, which Republicans call the “death tax,” can run as high as 55%, but it applies only to estates worth more than $600,000, or about 1.4% of all estates. The tax is expected to raise about $19 billion in revenues in the current fiscal year. Although the tax affects only a handful of wealthy individuals, Republicans have made cutting the tax a top priority. Senate Majority Leader Trent Lott (R-Miss.) also has called for its complete elimination.

Gingrich has also endorsed the idea in the past, but his comments Wednesday were intended to give “new emphasis” to his more dramatic tax reform ideas, said spokeswoman Martin.

That and other initiatives mark the end of Gingrich’s last few months of low visibility, which Martin said was spent in planning--not hiding.