Masonry Magazine October 1984 Page. 15
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THE REAL QUESTION ON TAX INCREASES
The real question on tax increases is what kind will come in 1985-not if Congress and whoever is President will get together to impose them. That's the consensus that has emerged in Washington in the past few weeks. The pulling and hauling between the candidates will no doubt continue until November. Democrats have found a hot issue, and Republicans can't duck it.
Off the record, even Republicans concede that there's need for a lot of new revenue to finally get on with the job of reducing the huge deficits that loom for years to come.
SO WHY ALL THE CONFUSION
So why all the confusion about the candidates' positions? Because Walter Mondale caught Ronald Reagan off guard when he first talked taxes. The unexpected election year call prompted opposition by GOP conservatives, and the White House made several mis-steps in reacting to Mondale's gambit. When it did get its act together, tax increases were an established issue. Reagan still strongly opposes any increases, especially in the income tax. He'll only consider raising more revenue if necessary-"as a last resort."
He hopes to have his cake and eat it, too. He'd prefer to get through the campaign without being pinned down, then deal with the enormous deficits after he is sworn in again.
IT IS WIDELY FELT
It is widely felt that the deficit is a major threat to the health of the economy over the long term. Red ink already soaks up savings needed for investment and keeps interest rates up. And the gap between government income and outgo, $172 billion now, will expand to as much as $263 billion in 1989. Spending won't be cut much more, as both sides in Congress admit. It will be all the lawmakers can do to keep the total from rising faster.
That explains the tacit agreement that most of the answer lies in raising a lot of new revenue, one way or another.
TAX EXPERTS IN BOTH CAMPS
Tax experts in both camps have been working on possible new schemes for raising revenue during 1985, even as their candidate-bosses trade barbs. The Republicans stress tax reform without ruling out raising any new money. The Democrats have opted to hit the issue head on, emphasizing more revenue, though their package incorporates a substantial element of reform, as well.
Here are the respective tax positions of both sides, as held at this moment. They'll be changed, of course, in the campaign and as Congress gets down to work in 1985.
STARTING WITH the Republican position
Starting with the Republican position-Reagan aides' known thinking. They claim that their approach would make the system "simpler and fairer," even though it excludes the income-tax rate increases the President opposes. Numerous deductions and credits would be eliminated so as to allow progress to a flatter schedule of tax rates that would permit dropping the top ones. A national sales tax is also under study as a way of lowering income rates. Republicans also oppose the repeal of indexation, due to start up next year.
Most of the other proposals in the Republican arsenal are loophole-plugging designed to support the President's basic proposition that a fast-growing economy will automatically deliver most of the money needed to get to budget balance.
Some further specifics in the Republican program:
* Health-insurance costs paid by employers would be taxed to workers over a family limit of, say, $175 each month.
* The investment credit of 10% would be ended or cut back.
* Some research and development credits would be limited.
* U.S. and foreign oil would be hit for conservation, too.
* Enforcement of the Tax Code would be stepped up sharply.
NOW-FOR THE DEMOCRATIC SIDE
Now-for the Democratic side, as Mondale and his people lay it out. Reagan's challenger would also shoot for tax simplification by eliminating some deductions and credits so that basic income tax rates can be lowered. But Mondale would lift the load on corporations and people making $60,000.
Some other aspects of Mondale's program in specific detail:
* Corporate profits would be subject to a 15% minimum tax.
* Indexing tax rates, now law, would be put off four years.
* A 10% surcharge would be put on all but lowest brackets.
* Stepped-up enforcement would feature a push on loopholes.
SOME WONDER WHETHER
Some wonder whether Reagan's opposition is so unyielding that it may forestall any significant action next year. After all, the GOP platform is flatly against tax hikes. However, necessity is expected to prevail. In any case, neither candidate will get all he asks. Congress will have its ideas. And the state of the economy will influence thinking: there'll be reluctance to vote big hikes if a recession looms. Net, though, some jumps are likely.