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Bush Cites the Cost Of Tax-Cut Repeal

Keeping with the theme of tax cuts...

From the Washington Post:
The Bush administration yesterday released a highly selective analysis of the cost to families of rolling back scheduled tax cuts, an early sign of the White House's plan to brand Democrats as tax raisers throughout their race for the presidential nomination.

In addition to using the issue to inject himself into the Democratic campaign, President Bush plans to make the extension and preservation of tax cuts a centerpiece of his general election campaign, senior Republican officials said.

The seven-page analysis, by the Treasury Department's Office of Tax Analysis, asserts that repealing the tax cuts enacted in 2001 and last month would mean a tax hike of $1,933 for a married couple with two children and an income of $40,000. Their taxes would go from $45 to $1,978, for an increase of 4,296 percent, the study said.

"If you are advocating repealing the 2001 and 2003 tax cuts, you are advocating a significant tax increase on the American people," said Rob Nichols, the Treasury Department's chief spokesman. "You're talking about raising taxes on roughly 100 million households."

Strategists for several of the Democratic candidates said they will try to avoid such a label by calling for changes only in the tax cuts that benefit the wealthiest Americans.

Howard Dean, a Democratic presidential candidate and former Vermont governor, was confronted with the Treasury Department figures on NBC's "Meet the Press" yesterday. He said they do not account for increases in property taxes because of cuts in federal services and shortfalls in federal aid to education.

"The real effect of the Bush tax cuts has actually been to raise taxes on most middle-class people and to cut their services," Dean said.

The research was prepared at the request of "Meet the Press," NBC and Bush officials said. The analysis does not include single people or lower-income couples, two groups that benefit little from Bush's cuts. Four of the examples involve married couples with one or two children making $40,000 to $75,000 a year, and the other two concern spouses who are both age 65.

Peter R. Orszag, a senior fellow in economics at the Brookings Institution, said the document "gives a misleading impression of the overall effect of the tax cuts." Just 27 million of the nation's roughly 140 million households consist of married couples with children, he said. Brookings figures show that under the most recent law, 81 percent of households would save $1,000 or less.

Nevertheless, Republican officials said the figures will be used as a weapon as Bush argues on the campaign trail that the tax cuts should be made permanent instead of ending over the next seven years, as they are scheduled to do.

A presidential adviser said Bush and his campaign will be aggressive in claiming that Democratic plans would amount to a tax increase.

"The central feature of the criticism of the Democratic candidates, and eventually candidate, will be that they don't have any constructive solutions other than to criticize the president and that they want to increase taxes and spend the money to increase the size of government," the adviser said.

The Democrats have proposed scaling back the cuts in various ways. Dean has promised to "repeal every dime of President Bush's tax cuts" from 2001 and 2003.

Rep. Richard A. Gephardt (D-Mo.) would repeal Bush's tax cuts to finance his plan to provide health coverage for Americans without insurance, and would introduce his own version of the Bush breaks on the child tax credit, estate tax and marriage penalty.

Sen. John Edwards (D-N.C.) announced an economic plan last week that would keep all tax cuts outside the top two income brackets. Among other breaks aimed at the middle class, he introduced the "American Dream Tax Credit" of up to $5,000 on a house down payment of up to $10,000, phasing out for high-income taxpayers and expensive homes. "I know this president wants to make the next election about taxes," Edwards said. "That's why I'm going to tell America the whole story: 'This president is the reason your taxes are going up. I'm going to cut them.' "

Sen. John F. Kerry (D-Mass.) would preserve the middle-class tax cuts but repeal those for the wealthiest and use the money to pay for, among other programs, a health care plan to cover all children.

Sen. Joseph I. Lieberman (D-Conn.) has not announced his full economic plan. Before the latest tax cut, he said he would repeal the 2001 law's future cuts for the top two brackets and modify the estate tax cut. He also has called for expanding the earned income tax credit.

Sen. Bob Graham (D-Fla.) would not repeal cuts now in place but does not support new ones.


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