The NYTimes > Economic View: Jobs? Oil? Iraq? On Second Thought, Let's Talk Taxes

New York Times > Business > Your Money > Economic View: Jobs? Oil? Iraq? On Second Thought, Let's Talk Taxes:
"THE economy is slowing, prices are rising and the lift that came from last year's tax cuts has faded into memory. What is the White House to do?

With the Republican National Convention just two weeks away, top advisers to President Bush are looking for a few big ideas to add some sizzle to the economic platform.

Don't expect Mr. Bush to advocate a national sales tax to replace the income tax, even though he flirted with the idea at a campaign stop in Florida last week. The suggestion drew hoots of derision from Senator John Kerry, the Democratic presidential nominee, who said consumers would face a 20 percent tax on everything they bought. Bush campaign officials quickly denied that any such plan was in the works."

Still, Mr. Bush's advisers said the president wants to make tax reform a cornerstone of his second term, and campaign officials see the potential to win over voters by pledging to fix a system that is widely seen as complex and unfair.

One thought is to change the system so that it focuses less on taxing what people earn and more on taxing what they spend. Even without a sales tax, this could be accomplished by letting people deduct money they put in savings and investments from their income, so they would owe taxes only on what was left - in other words, essentially on what they spent.…

The political question is this: Would bold new proposals create more excitement among voters, or would they mire the campaign in debate that could detract from the goal of promoting Mr. Bush?

It is also unclear whether voters have much appetite for another big idea from the president. Since taking office, after all, Mr. Bush has pushed through two huge tax cuts, which contributed to record deficits; a war against Iraq, which is not going especially well; and a broad expansion of Medicare, which is proving more expensive and less popular than its supporters expected.

For all the allure of replacing a tax code that millions of people resent, even a general proposal would open up an arcane debate that would be full of potential minefields. Mr. Kerry has already been saying that the Bush tax cuts flowed overwhelmingly to the very wealthiest taxpayers, and last week he jumped on a new study by the Congressional Budget Office that, he said, showed the top 1 percent of income-earners received one-third of the recent tax-cut benefits.…

http://www.nytimes.com/2004/08/15/business/yourmoney/15view.html?pagewanted=all&position=