Bentley stirs fear by suggesting secret tax plan, flatly denied by Treasury Income measure she cites as new began use in 1985

February 20, 1993|By Nelson Schwartz | Nelson Schwartz,Contributing Writer

WASHINGTON -- Republican Rep. Helen Delich Bentley has some Marylanders up in arms over the threat of radically higher taxes, even though Treasury Department officials, advocates for the elderly and others say she is dead wrong.

In appearances this week on two "talk" radio stations in Baltimore, Mrs. Bentley criticized President Clinton's economic plan and claimed that he was changing the way the government calculates taxable income. She called that a hint of a big tax increase to come.

"You're going to be hit in the pocketbook," warns the Baltimore County congresswoman from the 2nd District. "You're going to be taxed to death."

In particular, Mrs. Bentley says that senior citizens and others who own their homes could be taxed on the amount of money their homes might generate if they were rented out.

As proof, she cites a document released this week by the Treasury Department to explain the impact of the Clinton plan. A footnote to the document defines a statistical measure, known as Family Economic Income, which includes "imputed rent on owner-occupied housing."

"This is not a scam," Mrs. Bentley said. "This is a report from the Department of the Treasury."

But a Treasury spokeswoman said yesterday that there was nothing new about the statistical measure, known as FEI. The department has been using it to measure income since 1985, when Ronald Reagan was president. It is not used to calculate taxes owed.

Mrs. Bentley's comments raised fears among those who heard her remarks, especially elderly listeners. By yesterday, angry senior citizens were calling her offices as well as The Sun demanding to know what President Clinton planned to do.

Helen Fister, a retired government employee living in Davidsonville, said a friend told her what the congresswoman said on the radio. That made Mrs. Fister wonder if she, too, would be facing much higher taxes than first disclosed.

"I was worried by what I heard," she said. "My husband and I live on a pension. The intention might not have been to really tax people, but that sure sounded like what I was hearing."

Administration officials, a Republican aide on the tax-writing House Ways and Means Committee and other tax specialists agreed that no secret, new tax plan was in the works.

"That's a dumb thing to say," said Bob McIntyre, director of Citizens for Tax Justice, an independent Washington group.

"It's silly. FEI doesn't have anything to do with how they're going to tax people."

"Family Economic Income isn't a plan for the IRS," said Evelyn Morton, a legislative representative for the American Association of Retired Persons, which closely tracks government policies affecting the elderly. "It's a discussion among policy wonks over how to define income."

As used in Treasury Department calculations, Family Economic In come takes into account various elements of a family's wealth, including nontaxable items such as welfare, the value of tax-deferred Individual Retirement Accounts and Keough plans and interest on tax-exempt bonds, as well as wage and salary income.

The reason the Clinton administration is employing such a broad-based definition of income, suggested a Republican congressional aide, is to camouflage the amount of the tax bite that is falling on middle-income Americans. By making income look so large, he said, it makes it easier for Mr. Clinton to say that he is hitting rich Americans the hardest.

Mrs. Bentley denied yesterday that she was using scare tactics and said she was still convinced a huge new tax plan was in store.

"I think they are going to try to do it," she said. "The Treasury printed this. I didn't print it."

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