Cover Story

Keep the change?

Is that the taxpayers message? Seems to be. Judging by the two major party presidential candidates' tax proposals (or lack thereof), Al Gore hopes overtaxed voters will let him change the subject. But George W. Bush hopes overtaxed voters are prepared to say enough is enough

Issue: "Money to burn," April 15, 2000

Every year about this time, a strange thing happens in Washington, D.C. Lifelong, dyed-in-the-wool Democrats become Republicans for a few hours. At least they sound as if they're ready to convert:

"It gets worse every year," lamented one woman just a few minutes before the clock struck midnight last April 15. "It seems like the harder you work, the more money they take."

"Standing in line to give away my own money," a man muttered under his breath, as he waited impatiently to buy enough stamps for the thick, white envelope he was holding. But the line was going nowhere. The man at the front was having trouble with the postage stamp vending machine. As people behind him shuffled their feet and muttered under their breath, the hapless fellow at the head of the line repeatedly entered the code for the book of stamps he wanted to buy. Again and again nothing happened.

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Finally he exploded in an obscenity, cursing the IRS and punching the machine. No one looked shocked.

Call it the Mutiny of the Bounty. A thriving economy leaves more and more Americans flush with cash, and that, in turn, leads to more year-end checks written to the IRS. And even in an overwhelmingly liberal, Democratic city like Washington, people briefly rebel when it comes time to put that check in the mail.

Almost everyone who shows up on April 15 is there because they owe. If they were getting a refund, they would have filed a long time ago. Instead, they hang on until the last possible minute, postponing filling out complicated tax forms, and letting their money earn just a bit more interest before they turn it over to the government.

Finally, they drive to the huge, neoclassical Post Office building on Capitol Hill, and do the deed. As midnight nears, lines of cars snake for blocks around D.C.'s potholed streets. They search for parking-preferably under a streetlight-while D.C.'s finest set up flares and wave orange batons, trying to prevent total gridlock.

They come, they pay, and most of all, they gripe. On this one night of the year, the painfully PC residents of Washington sound like small-government, anti-tax fanatics. If only Election Day could be moved to April 16.

That particular tax reform, regrettably, is not being debated, and even overall tax reform is nearly invisible so far this election year. The Republicans fought over it vociferously in their primaries, but now that the winner is clear, the issue has largely fallen off the public radar screen. Even in Washington, all those angry taxpayers will probably forget the whole thing.

At least, the Democrats hope they'll forget about it. With the economy humming along and projected budget surpluses piling up, Al Gore would rather talk about almost anything else but taxes. A budget surplus, after all, means that the government is taking in more tax dollars than it can spend each year. That "problem" can be fixed in only three ways: Spend the extra money, save it, or return it to the taxpayers.

George W. Bush has promised to do the latter. Over a five-year period, the Bush tax plan would return some $483 billion to the public-roughly 82 percent of the projected $590 billion budget surplus. He would return money to taxpayers at all income levels by lowering tax brackets across the board, instead of targeting his cuts to only a few income groups.

Giving money back to people was like kissing babies just a few years ago. But John McCain taught the Gore campaign a useful lesson: that many Americans on most days don't much seem to care that they are paying more in taxes, as long as they still have more to take home. Mr. McCain called the Bush tax plan risky and irresponsible. He said Washington should keep the extra money to pay down the national debt and shore up entitlement programs like Social Security and Medicare.

Many voters-even some Republican voters-bought that argument. No surprise, then, that Mr. Gore has felt so free to adopt much of the McCain rhetoric. He calls the Bush proposal "economic snake oil" and a "risky tax giveaway"-never mind that taxes, by definition, are a government takeaway to begin with. He would return only a tiny portion of the budget surplus to the taxpayers through four targeted tax cuts. (See table.) The rest he would keep in Washington, ostensibly to pay down the national debt by 2015.

But critics contend that money kept in Washington is irresistible to politicians addicted to spending. In the days of budget deficits, those politicians had to push through tax increases to fund their spending habits-never an easy or popular thing to do. But a surplus gives them almost a blank check. Mr. Gore will have billions of extra dollars to create new spending programs and increase the budgets of existing ones, if he can just resist any political pressure to cut taxes.


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