Texas Gov. George W. Bush surprised many by his decision to emphasize tax policy in the final weeks of the campaign. After all, the tax issue should be a liability for Bush rather than an asset, representing easy fodder for the attacks of Vice President Al Gore '69. Gore's charges have merit: as a whole, the Bush tax reforms would represent a step backward in the search for a fair and progressive tax policy. Unfortunately, given the current political climate, both candidates' tax plans have focused concern on middle-class and wealthy Americans rather than the poor, and neither man has presented an adequate proposal for general reform.

No matter whose figures one chooses, there is no denying that the benefits the Bush plan would give the wealthy are large in absolute dollar terms. The Bush camp justifies these cuts by arguing that the wealthy pay more taxes and therefore deserve more relief--and to some extent, this argument is valid. If the distribution of taxes across income groups were perfectly fair, the best way to cut taxes would be to preserve the distribution of burdens by reducing everyone's rates by the same share. In absolute dollar terms, most of the benefits from this change would go to the wealthy, both because their tax rates fall more and because they have more income. However, assuming that the system is already progressive, these unequal benefits would be justified.

Unfortunately, this is not the plan Bush has put forward. Although Bush has emphasized his changes to the income tax, his plan also includes other cuts, such as the repeal of the estate tax and various benefits for corporations. In addition, the income tax is already progressive; excise and payroll taxes, which the Bush plan does not address, generally represent a much greater burden for the poor. The result is that Bush's plan, according to an analysis by the left-leaning Citizens for Tax Justice (CTJ), is highly uneven. While the poorest fifth of Americans will see their tax rates fall only by a little more than five percent and the middle fifth by seven percent, the top one percent of taxpayers will find their tax burden dropping by 13.6 percent--nearly twice as much as the middle class. When looked at as a whole, the Bush plan makes the relative tax burden of the poor and middle class heavier and that of the rich lighter; its claims of fairness apply only to one tax out of the entire system.

The sheer scale of the Bush cut is also reason for concern. The plan includes $1.3 trillion in direct cuts, but because this money could otherwise have been used for debt reduction, it would impose an additional $300 billion interest cost. Given a tax cut of this magnitude, Americans should remember that while the surpluses are temporary (and probably much smaller than the candidates would like), the tax cuts will live on, forcing the country during the next recession to decide between grueling tax hikes and deficit spending.

The tax plan of Vice President Gore is also somewhat imperfect. At a cost of roughly $500 billion with interest, the program is considerably more reasonable than Bush's tax splurge. Yet the many targeted tax components would add a number of new exceptions to the tax code, and there is a virtue in simplicity, especially when political logrolling is an ever-present threat. In many ways, the credits proposed by Gore represent spending programs under a different name. But the aims of the programs are admirable: we are very glad to see Gore's proposal to expand the EITC, a program which rewards the working poor and softens the blow of welfare reform, and we support government encouragement of personal savings and of investment in education and environmental protection.

There are two flaws that plague both candidates' plans, however. The first is a rhetorical and policy focus on the needs of the middle class rather than middle- and lower-income Americans. According to Congressional Budget Office figures, overall tax rates on middle-income families have fallen over the past few years and are currently at their 20-year average--there seems no pressing need to reduce taxes on this group above all others. Since the income tax does not have much effect on the poor, it need not be the center of all tax proposals; a better means of tax reduction would include a negative income tax on those for whom excise and payroll taxes are the greatest burden.

The second flaw is that neither plan does enough to combat the use of tax loopholes by wealthy individuals and corporations to escape their tax burden. A report recently released by CTJ and the Institute for Taxation and Economic Policy noted that top U.S. corporations have used loopholes to steadily reduce their tax obligations over the last decade. For example, Texaco earned $3.4 billion in profits from 1996 to 1998, but instead of paying taxes it received money from the federal government to the tune of $304 million. If the loopholes were closed, this money could be returned to individuals--we would rather see a negative income tax for the working poor than for Fortune 500 companies. Hopefully the next president will agree.