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Forbes Buying Way Into Nation’s Heart Millionaire With Flat-Tax Proposal Drawing Attention Away From Dole

Sat., Jan. 20, 1996

Walking through the gray morning fog toward a Rotary Club breakfast here the other day, Malcolm Stevenson Forbes looked up and into a bright, almost heavenly light. It was shining on him.

It came not from heaven, but signaled nonetheless that Forbes was, for the week at least, chosen.

It was the light of television crews, tripping over one another to keep the unassuming millionaire in view. Behind the cameras waited dozens of reporters, and behind them more than a hundred curious Rotary Club members waiting to hear him speak.

Forbes, who a few weeks ago drew only one reporter from the Goffstown Daily News for a similar breakfast near here, has arrived. He has become a major candidate for president.

Boosted by his flat-tax proposal and a television blitz financed from his own very deep pockets, Forbes has accomplished in 10 weeks an almost impossible political dream.

Leapfrogging past a field of veteran politicians, magazine publisher Forbes has moved into second place in opinion polls behind Kansas Sen. Bob Dole in the contest for the Republican presidential nomination, and even leads Dole in polls in some early primary states.

“We’re getting some real traction,” Forbes said over coffee at the Puritan Back Room restaurant.

“A groundswell is turning into a tidal wave,” said Patty Humphrey, a GOP activist here and wife of former Sen. Gordon Humphrey.

Said Forbes campaign manager, William Dal Col: “We are THE challenger to Dole. Period.”

Though polls had shown for weeks that Forbes was the only Republican steadily gaining support, his campaign knew it was getting serious when Dole started airing attack ads against Forbes and when all the other rivals starting attacking his signature flat-tax proposal during last weekend’s debate in Iowa.

That may or may not be true. But the fact that Forbes has come this far this fast is due to two things: a flat tax and a mountain of money.

Forbes has spent about $15 million so far and deluged television viewers here and in states such as Iowa, Arizona and South Dakota with ads touting his flat-tax proposal or ripping Dole as a political insider whose time has passed. Others, such as Dole and Texas Sen. Phil Gramm have spent more, but mostly on such items as offices and staff and fund raising itself. By financing his own campaign, Forbes eludes federal spending limits and also gets to spend 70 percent of his money on television.

But he also has something to say, albeit something said by many others with less fanfare. House Majority Leader Dick Armey has proposed a similar flat tax, and Forbes concedes he made his slightly more generous “to make a statement.”

What a statement. While much of the GOP presidential field focused on what Republicans were doing in Congress to cut spending and taxes, Forbes looked over the horizon at the next step.

“The American people today are frustrated,” Forbes said with his trademark grin. “Why is it we’re not doing better? Why can’t two incomes do the job that one job did a generation ago? Young people don’t understand why they don’t have the same opportunity to get ahead that their parents had a generation ago.”

The reason, Forbes said, is that federal taxes take too much money. Federal taxes take 24 percent of the average family’s income, he said, eight times more than the 3 percent they took in 1948.

Moreover, the federal tax code is too complicated and too inviting to special-interest lobbyists in Washington. In one of his more consistent applause lines, Forbes says there are different “words that rule our lives … The Declaration of Independence has 1,300 words, the Bible has 773,000 words, and the tax code has 7 million words … the only thing to do with this monstrosity is to scrap it, kill it, drive a stake through its heart, bury it and hope it never rises again.”

In its place Forbes proposes a simple, postcard-sized flat-tax form. Give people their first $13,000 of annual earnings tax-free, give them another $5,000 tax-free per child, then tax all the rest at 17 percent. For a family of four, their first $36,000 would be tax-free, he said, a cut from the average $3,000 they now pay.

Forbes brushes off criticisms that the rich would get the biggest tax cuts, or that those who live on dividends or capital gains would pay no tax at all.

Nor is he bothered that the current budget stalemate in Washington proves how difficult it is to cut spending enough to balance the budget. His flat tax would cut taxes and federal revenue by as much as $186 billion a year - but Forbes is a “supply-side” devotee who asserts that a resurgent economy would create millions of jobs and boost overall tax collections.

Nor does he care that he would eliminate two popular deductions - for home mortgage interest and charitable donations - that Gramm would keep in his flat-tax plan.

“Do the arithmetic, you gain by it,” he urged his audience.

Though Forbes talks about how the flat tax would help people at the bottom of the economic ladder, he does not often tell them directly. In one of his rare forays out onto the campaign trail the other day, almost all his time was spent with distinctly white-collar audiences, largely business people. When he broke for lunch after addressing employees of the Chubb insurance company, he didn’t go to the company cafeteria; he went behind closed doors for lunch with company chief executive officer and friend Dean O’Hare.

It’s hard to assess whether Forbes’ support in the polls is real, or whether it only reflects that his ads have made him so well-known.

On the campaign trail, Forbes cheerily boasts that the essence of the American dream is that “seemingly ordinary people can achieve extraordinary things.” In the campaign for the presidency, Forbes hopes that even ordinary millionaires can do as much.

MEMO: This sidebar appeared with the story: THE FORBES AGENDA Beyond the flat tax, here are some of Forbes’ views: Taxes. He is a critic of the child tax credit on grounds it would “provide no lasting stimulus to the economy.” The credit was pushed by President Clinton in his 1992 campaign and was part of the 1994 GOP “Contract With America.” Forbes would, however, provide a generous $5,000 per-child tax exemption in his flat tax plan. Immigration. Forbes has long advocated a liberal immigration policy, saying more people in the work force create more competition. Social policy. Forbes opposes a constitutional amendment outlawing abortion, saying any changes in the law should be made “little by little” after a national debate. He won’t say “yes” or “no” on whether he supports the Roe vs. Wade decision legalizing abortion. He opposes mandatory federal funding of abortions in programs like Medicaid but hasn’t said he would prohibit all such funding. Forbes supports Clinton’s “don’t ask, don’t tell” policy allowing homosexuals to serve in the military. Social Security. He believes the system should not be changed for anyone within a dozen years of retirement, since they have already made investment decisions. But he favors shifting younger workers to a system that puts some Social Security payroll deductions into private retirement accounts. Foreign policy. He has long advocated an interventionist approach, suggesting the United States threaten North Korea with military strikes if it did not abandon its nuclear program, and a forceful military response to Iraq’s invasion of Kuwait. Forbes, a sharp critic of Clinton’s decision to send troops into Bosnia, had in recent years urged the administration to adopt a more muscular approach in the former Yugoslavia. Environment. Supports oil exploration in the Arctic National Wildlife Refuge and says businesses should be given broad latitude in how they meet pollution and other environmental standards. Political reform. Supports congressional term limits and elimination of congressional pensions. Opposes spending limits on congressional elections. Health care. Backs vouchers for Medicaid and medical savings accounts for Medicare recipients, on grounds both will force consumers to make better health care choices, lowering government costs. Line item veto. Favors giving the president this power but says Congress should need only a simply majority to override the president, not the two-thirds majority called for in pending GOP legislation. Associated Press

This sidebar appeared with the story: THE FORBES AGENDA Beyond the flat tax, here are some of Forbes’ views: Taxes. He is a critic of the child tax credit on grounds it would “provide no lasting stimulus to the economy.” The credit was pushed by President Clinton in his 1992 campaign and was part of the 1994 GOP “Contract With America.” Forbes would, however, provide a generous $5,000 per-child tax exemption in his flat tax plan. Immigration. Forbes has long advocated a liberal immigration policy, saying more people in the work force create more competition. Social policy. Forbes opposes a constitutional amendment outlawing abortion, saying any changes in the law should be made “little by little” after a national debate. He won’t say “yes” or “no” on whether he supports the Roe vs. Wade decision legalizing abortion. He opposes mandatory federal funding of abortions in programs like Medicaid but hasn’t said he would prohibit all such funding. Forbes supports Clinton’s “don’t ask, don’t tell” policy allowing homosexuals to serve in the military. Social Security. He believes the system should not be changed for anyone within a dozen years of retirement, since they have already made investment decisions. But he favors shifting younger workers to a system that puts some Social Security payroll deductions into private retirement accounts. Foreign policy. He has long advocated an interventionist approach, suggesting the United States threaten North Korea with military strikes if it did not abandon its nuclear program, and a forceful military response to Iraq’s invasion of Kuwait. Forbes, a sharp critic of Clinton’s decision to send troops into Bosnia, had in recent years urged the administration to adopt a more muscular approach in the former Yugoslavia. Environment. Supports oil exploration in the Arctic National Wildlife Refuge and says businesses should be given broad latitude in how they meet pollution and other environmental standards. Political reform. Supports congressional term limits and elimination of congressional pensions. Opposes spending limits on congressional elections. Health care. Backs vouchers for Medicaid and medical savings accounts for Medicare recipients, on grounds both will force consumers to make better health care choices, lowering government costs. Line item veto. Favors giving the president this power but says Congress should need only a simply majority to override the president, not the two-thirds majority called for in pending GOP legislation. Associated Press



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