House Minority Leader Richard A. Gephardt, D-Mo., in another bid to steal the Republicans’ thunder, said Tuesday he is developing a proposal for a modified flat tax of 10 or ll percent to replace the graduated income tax system.
Gephardt’s plan strongly resembles an approach advocated by House Majority Leader Richard K. Armey, R-Tex., although Gephardt insists his proposal would be fairer to middle- and lower-income taxpayers.
Democrats have sought to reposition themselves politically since Republicans swept to power Nov. 8, promising major spending and tax cuts and dramatic changes to government programs. Both Gephardt and President Clinton proposed middle-class tax relief measures to rival those contained in the GOP “Contract with America.”
“I’m happy to see that Mr. Gephardt now recognizes the power of my flat tax idea, and welcome him to the debate,” Armey said.
A flat tax would greatly simplify the tax structure by eliminating most deductions and applying a reduced across the board tax to all wages, salaries and pensions.
Gephardt contends that Army’s 17 percent flat tax would be a major boon to the rich because it exempts capital gains, interest and all other unearned income. Wealthier people would end up paying a lower effective tax rate than middleincome taxpayers.