Bush Offers Spirited Defense of His Tax Proposal

After weeks of being pummeled by Democrats who said his $1.6-trillion tax cut plan disproportionately favors the rich, President Bush on Friday issued his most ardent defense yet of a reduction in the top income tax rate.

At a White House East Room event attended by several hundred cheering small-business owners, Bush said many in the audience now pay at the highest personal tax rate.

Therefore, such a reduction would benefit more than 17 million small-business owners, who generate 51% of the private-sector gross domestic product in America, the president said.

Bush seemed particularly annoyed as he decried “the noise, the background chatter, the kind of political clutter that tends to fog the real issue.” And he urged his audience to help him “fight” such “political hyperbole” by expressing their support of his agenda to their elected representatives in Washington.

“It is very important for Congress to hear from you. It is also important for Congress to understand the impact small businesses have on our economy and to always keep that in mind,” Bush said.

“If we want to have a strong economy and a strong America, it is important to understand that . . . small businesses provide 75% of the net new jobs in America,” he added.

The president’s remarks came only a day after top congressional Democrats criticized him for talking down the economy.

Bush uttered not a negative word Friday about the economy’s performance. As recently as Wednesday, he had described his tax cut plan as the key element of his “economic recovery plan.”

As a part of his 10-year, $1.6-trillion tax cut plan, Bush also is proposing to reduce from five to four the number of tax brackets and to lower the rates in each.

During his 20-minute address, Bush also issued a spirited, now-familiar defense of his overall budget and tax proposals, which he said would reduce the debt by $2 trillion, set aside sufficient funds to extend the life of Medicare and Social Security, increase domestic spending by 4% and create a $1-trillion “contingency fund” for emergencies.

Even after all that, Bush said, there is money left for the across-the-board tax cut. Critics have argued that there is not enough money to accomplish all that Bush has proposed.

In promoting the reduction in the top rate Friday, the president said: “Most small businesses don’t pay corporate taxes. Most small businesses are sole proprietors . . . and their businesses are subject to income tax rates.

“The small-business owner is incredibly important to the future of this country, and this tax relief plan is aimed at encouraging capital formation and capital growth in the small-business sector of America. And the Congress must understand that and must hear from y’all. The tax relief plan will increase cash flow of small businesses, giving folks more resources to buy more equipment and, as importantly, hire more workers.”

Bush also touted a repeal of the inheritance tax, a virtual crusade among small-business owners.

“I don’t think it’s fair to tax a person’s assets twice. I don’t think it’s fair for the small-business owner or the farmer or the rancher to work their life so they can pass their asset or their business on to a relative or a family member and have it taxed twice--once when you make the income and secondly after you die.”

After his midafternoon appearance, Bush went to Camp David, Md., for the weekend.

Earlier in the day, Bush met with visiting Irish Prime Minister Bertie Ahern. Bush said afterward that “it is clear that all sides want the Good Friday agreement to succeed” and reiterated his pledge that “the United States stands ready to help” in the peace process.