NASHUA, N.H. — Retired Gen. Wesley K. Clark on Monday unveiled the most sweeping tax-reform plan of any of the Democratic presidential hopefuls, a plan he said would dramatically simplify tax returns and benefit 31 million families without increasing the budget deficit.
Under Clark's proposal, a family of four making up to $50,000 a year would pay no federal income tax at all, and all families with children making up to $100,000 would see a reduction in their tax bill. The retired four-star general says he would offset the loss in tax revenue by asking millionaires to pay more.
For The Record
Los Angeles Times Wednesday January 07, 2004 Home Edition Main News Part A Page 2 National Desk 1 inches; 38 words Type of Material: Correction
Clark's tax reform plan -- An article in Monday's Section A on the tax reform proposal by Democratic presidential candidate Wesley K. Clark misstated the plan's per-child tax credit, giving it as $250. The correct figure is $2,250.
His proposal is a decidedly liberal approach, as well as one that clearly sets him apart from the Democratic front-runner, Howard Dean, whose call for repealing all of President Bush's tax cuts has been attacked by rivals as hurtful to the middle class.
Clark's plan also is designed to call greater public attention to his campaign.
He is hoping for a second-place finish in New Hampshire's Jan. 27 primary and an ensuing bounce going into the Feb. 3 primaries and caucuses in South Carolina and several other states where his tax code could resonate.
Clark's tax-reform plan is his most significant in domestic policy, and it is geared primarily to help people with children.
It also is designed to vastly simplify the complicated federal tax code.
"My tax-reform plan is simple," he told a gathering of community leaders here. "Those who make the most should pay more. Those who make the least should pay less."
Under Clark's plan, people could determine whether they needed to pay taxes by answering three simple questions about their income, their marital status and their number of children. They would not need to file tax forms if they did not owe the government money.
Currently, a family of four making $50,000 pays $1,583 in federal income taxes.
The campaign did not provide a price tag for Clark's plan but said it would not cost the government any money. Lost revenue would be made up primarily by the roughly one-tenth of 1% of American families who earn $1 million or more a year. They would be asked to pay more in taxes. Clark has said he would like to raise the taxes for top earners by 5 percentage points.
Clark also said he would repeal Bush's tax cuts for those making more than $200,000 a year and would close loopholes that allow businesses to avoid paying taxes by moving money to offshore banks, for example.
"Right now, the sad fact is that too many Americans are working harder and harder and earning less and less," with inflation having surpassed growth in income, Clark said.
"Under George W. Bush, the typical working family has seen its income fall by nearly $1,500 annually. As incomes have fallen, expenses have gone up."
Mindful that conservatives might criticize his plan as that of a tax-and-spend Democrat, Clark took them on directly, specifically Bush political advisor Karl Rove.
"Karl, I want you to hear me loud and clear, " Clark said. "I am going to provide tax cuts to ease the burdens for 31 million American families, and lift hundreds of thousands of children out of poverty, by raising the taxes on 0.1% of families -- those who make $1 million a year. You don't have to read my lips; I'm saying it.
"If that makes me an old-style Democrat, then I accept that label with pride and dare you to come after me for it."
Among the Democratic contenders, Dean and Rep. Dick Gephardt of Missouri have offered plans to abolish all of Bush's tax cuts, while others have pledged to do away with the tax cuts to the wealthiest Americans.
And Sen. Joe Lieberman of Connecticut has offered a plan that would abolish tax cuts to the rich and increase those to the middle class.
But no candidate other than Clark has put forth a proposal so radically different than the existing federal tax code. Any change in the code would need to be approved by Congress.
"This is nothing more than a Mini-Me version of Lieberman's plan," said Lieberman spokesman Jano Cabrera, referring to the diminutive character in the "Austin Powers" movies.
Cabrera also criticized the proposal for giving no tax cuts to couples with children who make more than $100,000 -- Lieberman's plan would cut taxes for everyone making less than $200,000 -- and for not granting any relief to single people or childless couples. The Clark campaign based some of its proposals on the work of Jeffrey B. Liebman, a professor of public policy at Harvard's Kennedy School of Government.
Liebman said that he was asked to review the plan, and that he believed it would greatly benefit lower-middle-class families and would simplify the rules for giving tax breaks to parents.
Under the current tax code, several measures affect the deductions granted to parents, such as income, number of people in the household and the age of children.
The system is so complex, Liebman said, that 68% of people who use the Earned Income Tax Credit pay someone to do their taxes for them.