GOP leaders pinning hopes on radical tax code reform Internal debate joined over party's fiscal agenda


WASHINGTON -- On the third anniversary of their "Contract with America," Republican leaders in Congress have begun a concerted drive to move beyond their signature issue of tax cuts and shift the national debate to a radical revision of the tax code.

The push toward fundamentally revising the progressive income tax, or scrapping it altogether, comes as the Republican Party begins an intense internal debate over a fiscal agenda to follow the balanced-budget agreement. It also reflects the fact that pollsters say voters are becoming less responsive to simple promises of tax cuts.

"As we've talked to citizens in the last few months about where to go beyond the contract, over and over people have said to us, 'Don't just cut taxes -- reform the system,' " said House Speaker Newt Gingrich in a telephone interview.

To lay the groundwork, Rep. Dick Armey of Texas, the majority leader, and Rep. W. J. "Billy" Tauzin of Louisiana announced last week that they were embarking on a three-city "Scrap the Code" tax tour in October. The pair plans to debate the merits of Armey's proposal for a flat tax and Tauzin's call to substitute a national retail sales tax for the income tax.

Even inside the Republican Party, this promises to be a divisive debate. House Republican leaders acknowledge that no consensus exists among the members on what kind of tax revision to embrace.

Some wary Republicans remember how Steve Forbes' call for a flat tax came under attack in the 1996 Republican primaries by critics saying it would sacrifice billions in federal revenue and help the wealthy at the expense of the middle class.

And because Gingrich has also pledged that the party will push for a new tax cut every year, his remarks have sent congressional Republicans rushing to promote a favorite idea for consideration, even though most targeted tax breaks would be eviscerated under any radical tax revision.

Republicans are also split over whether to push the tax revision issue forward next spring in time for the 1998 midterm congressional elections or wait for the presidential campaign two years later.

"The ultimate goal, obviously, is to have radical tax reform," said Rep. Tom DeLay of Texas, the House whip. "We have not decided exactly how you get there."

The ferment inside the GOP comes at a time when the nation looks toward a balanced budget at century's end.

With majorities of both political parties in Congress having voted for the plan to erase the federal deficit by 2002 and to trim taxes, Democrats have cut into the Republicans' traditional advantage on fiscal issues.

Moreover, some Republicans say that two decades after former President Ronald Reagan rode into office as the apostle of slashing taxes, pollsters are finding high levels of cynicism about tax cuts.

"What pollsters are telling us," a House Republican aide said, "is that the tax cut issue doesn't pack the punch it once packed, but Republicans would be foolish to walk away from the tax cut issue because it's ours and we should keep it."

In a recent 222-page advice manual he sent to Republican lawmakers, Frank Luntz, a consultant who helped craft the "Contract with America," described taxes as "the perennial GOP issue, an issue we can never, ever afford to cede to the Democrats."

He warned that because former President George Bush and President Clinton had both made tax pledges that they broke, "the public just doesn't trust politicians who promise tax cuts."

Another factor driving the GOP debate, lawmakers say, is the belief that the booming economy will probably bring in more tax revenue in the next few years than had been projected in the balanced-budget agreement. That has started lawmakers in both parties thinking about the politics of a surplus.

Some Republicans have been arguing that at least some part of any surplus money should go to pay off not just the deficit, but the national debt.

Other Republicans continue to focus on tax-cutting. House sophomores are proposing the elimination of the so-called marriage penalty, under which many married couples who file jointly are pushed into higher tax brackets because of their combined income.

But the longer-term goal, party leaders say, is to shift the debate toward the radical revision of the nation's tax system.

"I think the first thing we need to do is to have a rock-solid opinion in the country that the current system is so flawed that it can't be fixed and that it needs to be replaced," said Rep. John A. Boehner, an Ohio Republican. "And there's a national discussion that needs to go on to validate that that's in fact the case."

Pub Date: 9/28/97

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