Presidential Race Muddies the Tax-Cut Issue

March 01, 1992|By ELAINE CIULLA KAMARCK | By ELAINE CIULLA KAMARCK,Elaine Kamarck is a senior fellow at the Progressive Policy Institute. She wrote this commentary for Newsday.

We are now into the tarmac phase of the presidential campaign -- when all subtlety and most thought is sacrificed on ** the altar of the 10-second television sound bite. Unfortunately, this happens even when politicians start out with the good intention of trying to deal with real problems of real people.

Take the middle-class tax cut. This issue has been of central importance to both the Democratic and Republican campaigns. And yet, in the course of the campaign, the initial rationale for a middle-class tax cut has been lost. It has become an anti-recession proposal.

When it is considered as an anti-recession proposal, its critics are right: It fails; it simply isn't an economic stimulus. The more Americans hear Paul Tsongas ridicule the notion that an extra 97 cents a day will help the economy, the more they are likely to think that everyone involved with the middle-class tax cut -- from the president to the Democratic candidates -- is pretty stupid.

But the origins of the middle-class tax cut were not in economic policy -- they were in social policy. Before the issue got clouded by the search for a quick fix to the recession, Democrats and Republicans were looking at the American family and wondering: How did the previous generation of parents do it? By which is generally meant: How did they rear so many more children than we currently have on only one income? Most of the explanations do not lend themselves to easy political solutions. But one does.

In the 1940s and 1950, the federal government had a family policy -- it just wasn't called that. The value of the personal exemption on the income tax in those days was so great that a middle-income family of four paid virtually no federal taxes.

Because the value of the personal exemption was allowed to erode over time, a tax policy that favored those with children over those without children actually began to work the other way. Between high taxes and slow economic growth, the economic burden on middle-class American parents -- especially single parents -- has been devastating.

Before the campaign ever started, Democrats and Republicans in Congress were united in the belief that something ought to be done about the tax burden on people with children.

Because restoring the value of the personal exemption to its 1948 levels is ridiculously expensive, the best proposal, by Sen. Joseph Lieberman, D-Conn., targeted the tax break to lower- and middle-income families with children of pre-school age. The rationale behind the Lieberman plan is that quality day care for babies is more expensive than it is for school-age children and that young parents (whose incomes are lower) are least able to afford either to stay home or have good day care.

Enter the presidential campaign and the desire to become all things to all people. The middle-class tax cut moves from poorer families with small children to all families with children.

Arkansas Gov. Bill Clinton would extend an $800 tax credit for each child, regardless of age, and President Bush promises a $500-per-child tax break for all children. Mr. Clinton also throws in a 10-percent tax cut for middle-class people without children and Nebraska Sen. Bob Kerrey advocates a $400-per-household tax cut for everyone in the middle class regardless of children.

The same pressures that cause the presidential candidates to promise everything to everybody are also at work in Congress. When the benefits are spread around, everyone gets a little bit. But the families most strapped, families rearing young children, don't get enough to make a difference.

A good solution to a real problem (the squeeze on families with children) has turned into a not-very-good solution to a different problem (the recession). Is it any wonder voters get fed up with


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