Bold Tax Plan Offered By Richard Gephardt
A leading Democrat joined the tax-cutting debate Thursday, unveiling a bold plan that would slash the top federal income-tax rate for three out of four Americans to 10 percent and wipe out all deductions except for mortgage interest.
House Minority Leader Richard A. Gephardt, D-Mo., said his plan would dramatically simplify the tax code but, in contrast to GOP proposals - such as House Majority Leader Richard K. Armey’s flat tax and Ways and Means Committee Chairman Bill Archer’s, R-Tex., consumption tax - it would focus tax relief on working and middle-class Americans and offer less-generous cuts for the wealthy.
Gephardt said a majority of the nation’s taxpayers would file no income tax returns at all under his plan, and that most of the remainder would be able to file their returns on a form no larger than a postcard.
Gephardt said his plan would “bring in exactly the same amount of revenue” to the U.S. Treasury as the existing income tax code. But to achieve lower rates without reducing revenue, Gephardt would dispense with several popular deductions in the current tax code that have strong political support.
For example, under the Gephardt plan, workers would be taxed on health insurance and other fringe benefits provided by their employers. Charitable contributions could no longer be excluded from federal taxable income, nor could state and local tax payments.
Gephardt’s proposal to tax fringe benefits, including employer contributions to pension funds, seems certain to provoke concern among labor unions, which have traditionally been Gephardt’s strongest political supporters.
xxxx TAX PROPOSAL Highlights of the tax plan proposed by Richard Gephardt, D-Mo.: Married couples earning up to about $60,000 and individuals to $32,000, would pay a 10 percent tax rate, after deductions. Maintains taxes on capital gains and savings interest. Keeps the earned income tax credit for the working poor and home mortgage interest deductions. Deductions for mortgage interest would be retained; eliminates most others. Forbids congressional income tax increases without direct voter approval. Increases the tax rate to 20 percent, after deductions, for married couples with taxable incomes of $40,200; 26 percent at $90,150; 32 percent at $148,150; and 34 percent at $264,450. Raises the tax rate for singles to 20 percent starting at $24,050; 26 percent at $58,300; 32 percent at $121,600; and 34 percent at $264,450.