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By Newsweek Editors
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It's fall. the leaves are changing, the new school year is underway and candidates are pledging to reduce taxes. But tax-cut fever seems particularly frenzied this election year -- partly because of the success of Republicans Christine Todd Whitman of New Jersey, William Weld of Massachusetts and John Engler of Michigan. All won governorships by pledging big tax breaks, and all remain popular, a fact not lost on this year's Democratic and Republican candidates. But though all tax cuts sound pleasant, they vary widely by degree of plausibility and potential harmfulness. A guide to distinguishing demagoguery from reform:
It used to be that politicians promised voters generous new government spending programs without any way of paying for them. Now they offer extravagant tax cuts without a hint of how to replace the lost revenue. GOP gubernatorial candidate John Rowland of Connecticut promises to eliminate the state income tax. That wouldn't be radical in some states, but Connecticut's income tax provides one third of its revenue. That would surely bring steep cuts in funds for prisons, hospitals, universities, highways and local schools -- all favorites of the middle class.
The plan that most fails the sniff test comes from House Republicans. Their ""Contract With America'' proposes a federal tax cut of $30 billion a year -- but also promises a balanced budget by 2003. The 71 ""possible'' spending cuts they suggest won't come close to closing the $600 billion to $700 billion revenue gap. That could mean squeezing entitlements like Medicare, Medicaid and veterans' benefits -- and eliminating, say, the FBI, the park service, the federal prison system and college loans.
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Some public officials had been blessed with economic conditions that made real tax relief possible -- but they got greedy. Arizona's Republican Gov. Fife Symington has a $318 million surplus and a booming economic base. But Symington has overreacted and proposed phasing out income taxes completely. Ellen Sauerbrey, the GOP candidate for governor in Maryland, sensibly proposed spreading her tax cuts over four years -- then squandered her credibility by advocating rate reductions that would lower state revenues by 10 percent. And she hasn't bothered mentioning which programs she'd do without.
The right way to do it is slowly but surely. Iowans have two candidates proposing responsible tax cuts. Republican Gov. Terry Branstad's proposal would lower income taxes by 15 percent, but because the state has other revenue sources, his plan would cut revenue by only 5 percent. His challenger, Attorney General Bonnie Campbell, wants to reduce the sales tax from five cents to four -- but only if the economy stays healthy.
Tax cutting does have risks for the polity and the politicians. Ronald Reagan promised to cut income taxes -- and he did. But the deficit grew from $79 billion to $221 billion. George Bush promised to hold the line on taxes -- and he didn't (side effect: he received 37 percent of the vote in the next election). Bill Clinton promised a middle-class tax cut, raised taxes instead and is again hinting at a cut (side effect: we'll get back to you in 1996). The successful tax cutters -- Engler, Whitman and Weld -- all have something in common: none is likely to keep every last promise but none is breaking any outright. They've convinced voters they are moving in the right direction and not so fast that they force unpopular sacrifices. It's a hard concept to put on a bumper sticker, but the safest message seems to be, vote for me, i'll only partially keep my irresponsible promises.
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