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Tax Code Haters Hope to Ride It Into the Sunset

March 09, 1998|JANET HOOK | TIMES STAFF WRITER

WASHINGTON — Steve Forbes' opponents for the Republican presidential nomination two years ago treated him like a crackpot when he declared: "You can't tinker with the tax code. You can't reform it. You must kill it, drive a stake through its heart, bury it and hope it never rises again to terrorize the American people."

Now, all of a sudden, the idea of ditching the tax code has become Republican orthodoxy, outpacing the hopes even of its devotees. House and Senate GOP leaders have promised a vote this year on legislation to let the code expire at the end of 2001. Two top House Republicans have been crisscrossing the country to tout alternatives to the existing tax system. Forbes, back on the road with his own "tax code termination tour," plans to launch a media blitz on the issue this week.

The idea is getting oxygen from the public's fury toward the complexities of the tax code and the blunders of the Internal Revenue Service. It's a new way to stir up the anti-government animus that helped bring Republicans to power in Congress in 1994. And it appeals particularly to the nation's millions of small businessmen and women who are a core part of the GOP's political base.

"It is a way to talk about getting government off people's backs and out of their lives in a more credible and tangible way," said Cleta Mitchell, who is coordinating a tax-reform petition drive by the National Federation of Independent Business, a small-business lobbying group.

What's more, the idea gives Republicans a tax issue to rally around in an election year even though they seem to be oddly at sea about what kind of tax code they want instead. They cannot agree whether to propose a flat tax or a sales tax, whether to cut taxes on married couples or on capital gains.

"As a party, Republicans are so used to capitalizing on Democratic tax increases," said GOP pollster Glen Bolger. "Now that we're in power, unfortunately Democrats aren't raising taxes, so now what part of the tax message do we run on?"

Not incidentally, the drive to deep-six the tax code puts President Clinton and his fellow Democrats in the position of defending the tax status quo. The movement has acquired so much momentum that Clinton felt compelled to respond this month with a speech denouncing the notion as "misguided, reckless and irresponsible."

The idea is a simple one. Republicans are preparing to pass legislation this year that would set a Dec. 31, 2001, expiration date for the entire tax code. Between now and then, proponents say, Congress and the nation would debate what kind of system they want in its place.

The leading alternatives being discussed by Republicans are a flat tax, being pushed by House Majority Leader Dick Armey (R-Texas), and a national sales tax, whose leading proponent is House Ways and Means Committee Chairman Bill Archer (R-Texas). But there is nothing even approaching a party-wide consensus behind either proposal.

That schism is ignored by the scrap-the-code legislation, which is silent on what kind of alternative would be enacted. The legislation now has 153 co-sponsors in the House and 30 in the Senate. Gingrich has promised to bring the issue to a vote in the House, possibly in June, according to Rep. Steve Largent (R-Okla.), one of the proposal's sponsors. Senate Majority Leader Trent Lott (R-Miss.) has promised to bring it up in the Senate and recently announced that similar but nonbinding language would be included in a budget measure coming up this month.

All that is enough to goad Clinton into action. "I think we have to take it seriously now so that the public won't take it seriously later," said Gene Sperling, director of Clinton's National Economic Council.

Proponents of the measure said the tax code has become oppressively complex and unfair but that Congress will not even think about the root-and-branch overhaul it needs unless it faces an action-forcing deadline.

Critics countered by saying it is irresponsible and risky to vote to abolish the code before Congress decides what will replace it. Clinton argued that passage would create vast uncertainty about the tax code, potentially crippling long-range financial planning of businesses and families. Some Republicans agree, including the influential chairman of the Senate Finance Committee, William V. Roth Jr. (R-Del.).

"He shares everyone's frustrations with the tax code, but he does have some concerns about the uncertainty that legislation to sunset the code would create without an alternative ready to go," said Ginny Flynn, Roth's spokeswoman.

An aide to one House Republican co-sponsor conceded that many complaints about the bill already have been lodged by Wall Street allies and big donors. "We got more than a few phone calls from people in New York saying it would create mass instability."

No one expects the bill to become law this year. Even if it does clear Congress, Clinton is expected to veto it.

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