Taxes: to cut or not to cut

Question from Republicans: When will Democrats finally acknowledge that federal taxes are the highest since World War II, and offer a plan to give back the people's overpayment?

Jim Nicholson, Republican chairman: As Americans struggled to meet last week's IRS deadline, they came face-to-face with a distressing fact: Federal taxes now consume a larger proportion of our Gross Domestic Product than at any time since World War II.

That's right - despite the child tax credit passed by the Republican Congress (over the Clinton-Gore administration's opposition), federal taxes now consume 20.4 percent of GDP, compared to 17.5 percent of GDP when the Clinton-Gore administration first took office. Individual income taxes alone now consume nearly 10 percent of GDP, compared to 7.7 percent in 1992.

That means every man, woman, and child in America is paying $10,298 this year, up from $8,263 ten years ago. And that means the typical family is now turning over close to half its earnings to politicians and bureaucrats. To put it another way, the average taxpayer now must work from January 1 to May 2 to pay for government at the local, state and federal level. Only on May 3 do they start working for themselves.

I know what Joe is going to say: He's going to say it's ''risky and reckless'' to let people keep more of the money they earn. But that kind of tired Democrat scare tactic won't wash. Americans are coming to understand that reducing the tax burden is not only good for American families, it is sound economics: It enriches local communities (rather than Washington) and leads to new jobs and opportunities for all Americans. What's more, it's a matter of simple fairness: Excess tax payments belong to the men and women who earned that money in the first place - not to the government.

The truth is, it is Democrats who would imperil the American economy based on their belief that a bunch of politicians and bureaucrats in Washington have better uses for our money than we do.

I've really got just one question for Joe - when was the last time you walked out of a McDonald's, having told the youngster at the counter to keep the change?

Joe Andrew, national Democratic chairman: Americans are enjoying the longest economic expansion in this nation's history. In fact, average income taxpayers have the lowest effective income tax rate in 20 years. The middle 20 percent of taxpayers were projected to pay only a 5.4 percent effective tax rate in 1999, compared to a 6.5 percent rate in 1989, President Bush's first year in office.

Economic prosperity should touch all Americans, and Democrats are dedicated to making that happen. Unlike George W. Bush's risky multi-trillion-dollar tax scheme that jeopardizes our economic security and threatens to return the country to deficit spending, Democrats want to make sure that middle and lower-income families - the people who need help the most - feel tax relief first.

Democrats have already passed targeted tax cuts and credits for education, savings and the environment. We can do more, and do it responsibly, with more targeted tax cuts.

In his State of the Union speech in January, President Clinton proposed a plan that maintains fiscal responsibility while investing in the future, strengthening Social Security and Medicare and paying down the national debt. Targeted tax cuts include an incentive for small businesses to offer pension programs for employees, reducing the marriage penalty, a child and dependant care tax credit and a charitable giving credit.

Meanwhile, Bush's risky $2 trillion tax cut gives the richest five percent of taxpayers over 50 percent of the total tax cut. Bush touted the scheme on his web site with a ''tax cut calculator,'' but the program doesn't show his fat-cat donors' enormous take of the tax cut. To remedy the glitch, the DNC created MillionairesForBush.com so that anyone can see how Bush's tax cut really rewards the wealthiest. Voters have a real choice in November: to continue this prosperity, honoring our commitments while providing targeted tax cuts, or, to follow the Republican/Bush path, blowing the surplus on a binge of upper-class tax cuts that leaves millions of Americans out in the cold.

(Jim Nicholson is chairman of the Republican National Committee. Joe Andrew is national chairman of the Democratic National Committee.)