And All Through the House, Pols Ran Off at the Mouth

This may be the season for giving, but Americans should be wary of jolly-looking folks promising gifts for one and all. They are not Santas, of course, but politicians gearing up for a 1998 election campaign in which candidates are expected to appeal--or pander--for votes by promising to cut taxes.

They prey on the perception that taxes are too high. Some taxes may be too high, but compared to what? To the services delivered--the quality of public schools, for instance? Or too high as a percentage of income? As measured against the demands on government, or the real needs of the state or the nation?

But the debate rarely reaches that level of sophistication. Winning elections is what counts. As the focus groups demonstrate, simple messages resonate with voters. In recent campaigns, some politicians have been particularly adept at parlaying tax-cut promises into victory. In Virginia this November, James S. Gilmore III was elected governor on a simple but understandable platform: He would abolish the personal property tax on cars and trucks.

In New Jersey, Republican Gov. Christine Todd Whitman was first elected four years ago by attacking incumbent Democrat Jim Florio for raising taxes. Whitman promised to cut the income tax by 30%. She did that but then took heat because property taxes continued to increase. Whitman won reelection last month, but only barely.

Like generals, political strategists often fight the last war over again. In the 1998 congressional and legislative elections, many politicians are expected to run on some sort of tax-cut pledge. President Clinton sought to capture the issue by disclosing a week ago that he may propose a tax cut as part of his new budget, to go to Congress early next year. But, appropriately, Clinton said it is important to make sure the federal budget is in balance first.

The most tantalizing promise is to radically overhaul the federal income tax, the major catalyst of anger against taxes. The promisers would replace it with a single-rate flat tax or some form of national sales tax, thus effectively wiping out the tradition of a progressive tax system.

Voters should be particularly skeptical of dramatic simplification schemes. There is virtually no chance of such a plan winning the approval of Congress and the president, to say nothing of the megabuck special interests that thrive on the current loopholes. The last three “reforms” of the federal tax structure only made it more complicated.

There is plenty of room for real reform and tax simplification. A logical start is elimination of the marriage penalty in the federal income tax. The state tax return should be made to conform to the federal return to the extent possible. But those changes won’t grab a voter the way a flat tax proposal will.

Both Congress and the Legislature voted modest tax reductions within recent months. Federal and state taxpayers have yet to reap any benefits. Nor is it yet clear how much the cuts will cost government in the long run.

In 1998, Californians and other Americans are likely to hear that the only thing better than one tax cut is another tax cut. That’s chop-logic, of course. The prudent voter will demand a thorough examination of the political Santa’s bag of gifts, or tricks.

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Tax Burdens

Percentage of median family income paid in various taxes:

Fed. income tax

State, local taxes

Payroll taxes

Note: Corporae taxes, both federal and local, are included. Payroll tax is employeeportion only.

Source: Tax Foundation