Bauer to propose own version of flat tax

Conservative GOP candidate looks to add economic plank to his campaign

By Michael Kranish, Globe Staff, 09/23/99

ASHINGTON - Gary Bauer, the Republican presidential candidate known for his ties to religious conservatives and for his strong opposition to abortion, plans today to open a new front in his campaign by unveiling a flat-tax plan that rivals the one put forward by Steve Forbes.

Bauer, in calling for a 16 percent flat tax and a 20 percent cut in Social Security taxes, is hoping to attract voters in places such as the first-primary state of New Hampshire, where economic issues traditionally are more important than social matters. Bauer's strength so far has been in Iowa, the first caucus state. He came in fourth in the August straw poll there, apparently by stressing his antiabortion stance.

''We need a full-scale, well-stated economic agenda to compete in more secular states in the primaries,'' said Jeffrey Bell, a senior consultant for Bauer.

Despite some enthusiasm for him in Iowa and in some Southern states, Bauer has failed to make much headway nationally. He was backed by just 3 percent of likely Republican voters in a New Hampshire poll conducted by The Boston Globe from Aug. 27 to 31.

While Bauer has mentioned elements of the plan and has posted an outline on his Web site, today's address at the National Press Club here will mark the first time he will devote a full speech to the issue, according to aides.

''The total federal tax bite is bigger today than when our fathers and grandfathers marched off to defend freedom in World War II,'' an advance text of Bauer's speech said. ''In the Bible, God only asks for a tithe, one-tenth. And feudal lords were prohibited from confiscating more than a third of their serfs' crops. Yet today the tax burden on the typical working family exceeds even what humble serfs were required to pay the robber barons of the Middle Ages.''

Bauer's aides said his plan is designed to be more beneficial to lower-income people than the Forbes plan. Bauer, for instance, specifically retains the Earned Income Tax Credit, which reimburses qualified lower-income people for certain income taxes. Forbes has said the status of the tax credit will be determined as part of a welfare overhaul.

Several other candidates have put forward tax plans, including former Vice President Dan Quayle, who has proposed a 30 percent tax cut. The Republican front-runner, Texas Governor George W. Bush, so far has said only that he wants to cut taxes.

These are the highlights of Bauer's plan:

Individuals and businesses would pay a 16 percent flat tax, compared with the 17 percent plan proposed by Forbes. While most deductions would be eliminated, the deduction for charitable contributions would be retained. The deduction for existing home mortgage interest would be allowed, and the plan seeks to promote lower rates for new mortgages.

Many analysts have criticized the flat tax because they think it would create a budget deficit. But aides portray the Bauer plan as ''revenue neutral'' because it would increase certain investment taxes on businesses to make up for the cut in personal taxes.

The Social Security payroll tax would be cut by 20 percent, with individuals allowed to use the savings any way they want. As a result, Social Security benefits would be cut by a roughly corresponding amount, Bell said. Social Security taxes might ''ratchet up'' at a modest rate in 10 to 20 years, he said. ''We are trying to be honest about the costs as well as the benefits,'' Bell said.

Capital gains would be taxed at 16 percent, down from the current 20 percent. The ''death tax,'' or estate tax, would be abolished.