Gore Tax Policy Built on False Premise, Say Analysts

By Cheryl K. Chumley | July 7, 2008 | 8:26 PM EDT

(CNSNews.com) - Democratic presidential contender Al Gore's insistence on a targeted rather than a sweeping tax cut plan is based on false information, an analyst with the Alexis de Tocqueville Institution said.

In fact, according to Melanie Scarborough, senior fellow for taxes and regulation, an across-the-board cut would have the opposite effect of what Gore predicts - that is, the economy would blossom, rather than wither.

"It's wrong," Scarborough said, speaking of Gore's claims that the deficit would skyrocket under a tax cut plan that allows the rich to benefit. "What drives up the deficit is when the government spends more than it takes in. That is exactly what would happen under the Gore plan."

In his speech last week to the Democratic National Convention in Los Angeles, Gore promised to fight for a "full range of targeted tax cuts to working families," using money accrued from the nation's budget surplus.

"But let me say it plainly," Gore continued. "I will not go along with a huge tax cut for the wealthy at the expense of everyone else and wreck our good economy in the process."

There would be no such outcome with a broad tax cut, according to Scarborough, who says history has already proven her point. In the 1920s, the 1960s, and the 1980s, sweeping tax cuts under the presidencies of Warren G. Harding, Calvin Coolidge, John F. Kennedy and Ronald Reagan brought high returns for the country in terms of revenue, she said.

"Harding and Coolidge, when they cut taxes, they saw a 60 percent increase in tax revenues returned. For Kennedy, it was 62 percent, and Reagan, 54 percent," Scarborough said, before quoting Kennedy. "[He said] our true choice is not between tax reductions on the one hand and avoidance of deficits on the other. [He said] the soundest way in the long run is to cut the rates."

That theory has been proven correct several times in the past century, she said, yet voters are still unaware that plans like Gore's - to target reforms rather than provide sweeping relief to all - "hurt themselves in the long run."

"A flat tax would be the best system," Scarborough explained. "That's utterly fair. The only reason people say it isn't is they don't understand the system."

Lawrence Parks, executive director for the Foundation for the Advancement of Monetary Education in New York, agreed.

Most people, Parks said, do not even realize the discrepancy between the Clinton Administration's claim, that today's economy is the best in years, and the Office of Management and Budget report, that Americans now pay the highest federal income tax rate since World War II.

Parks said the majority of workers know they are working more hours for less pay, but do not possess the economic knowledge necessary to effectively argue their point.

"You have to keep in mind, when they're (Clinton Administration) talking about the great economy, they're talking about the goods and services being sold," and if the rich earn more, they purchase and sell more, Parks said.

So when the administration claims targeted tax cuts would benefit the lower income earners, Americans should recognize that statement as false and demand real relief - flat tax rates or lowered payroll taxes, Parks explained.

Reaction to Gore's promise for targeted relief has been mixed, and seemingly largely dependant upon partisan loyalties, according to various stories broadcast and published after the recent convention. But the New York Daily News published an account Tuesday in which some in Gore's own party were reportedly questioning the candidate's tactics, fearing he was "misreading the way the economy and the country have changed" by holding fast to wealth "redistributionist" ideals.

Numerous party and administration officials back Gore's view of the tax situation, including the president's chief of staff, John Podesta - who called any relief that was not targeted at the middle and lower classes a fiscally irresponsible plan - and Iowa Congressman Leonard Boswell.

"The taxes we pay provide invaluable services to our state and our communities," the Democratic representative said, in a written statement. "We must be mindful that while an across-the-board cut sounds nice, a better way to help families and stimulate the economy is to provide targeted tax cuts."

Too much money taken from the federal coffers and returned to the hands of the rich would compromise the solvency of such programs for the middle class as Social Security and Medicare, Boswell added, as well as increase the federal deficit and damage the economy as a whole.