McCain signs no-tax-on-Internet pledge, challenges Bush to do likewise

By Glen Johnson, Associated Press, 01/18/00

CONCORD, N.H. -- Sen. John McCain signed a pledge today not to tax Internet sales and challenged George W. Bush to do the same as the Republican rivals for the presidential nomination sparred long distance over competing tax plans.

"I challenge all the candidates, including Governor Bush, to take this pledge," McCain said at a chamber of commerce breakfast in Nashua, N.H., after signing the document for a group called the New Hampshire Citizens for a Sound Economy.

The Arizona senator said the current three-year moratorium on new Internet taxes on such things as access should be a "permanent ban." Bush has said he supports the moratorium and that it should continue "for several more years to determine the full impact of e-commerce on our society."

The moratorium does not affect state sales taxes on e-commerce, which are controlled by a Supreme Court decision requiring a business to have a physical presence in a state before it can be forced to collect sales taxes. A congressional panel is mulling whether to recommend banning sales taxes on Internet commerce -- a ban McCain also supports.

The Texas governor, making a pitch this morning for votes at the New England Motor Freight Corp., in Concord, urged New Hampshire residents to compare his tax-cut proposal with McCain's, which he suggested has gone through revisions because of inherent flaws.

"I think it's a Washington mindset that says I'll lay something out and then if it takes on a little water, I'll amend it and keep amending it," said Bush, who then touted his own plan. "I believe that someone running for president must lay out a plan that he is willing to defend from the minute it is laid out all the way through not only the primaries but the general election."

Taking the tax issue to the airwaves, Bush released a new TV that was beginning today in New Hampshire. "Washington politicians want to keep your money in Washington. Not me," Bush says in the ad. "You settle the debate: tax cuts or bigger government."

His campaign is spending enough money so the typical TV viewer will see the ad four to six times over the next week.

Bush tried to poke holes in McCain's tax-cut plan on Saturday when he said in a GOP debate that McCain's proposal would impose a $40 billion tax increase on certain employer-provided benefits.

The architect of McCain's plan said Monday that Bush was wrong.

Mark Spitzer, a Phoenix tax attorney, said McCain's proposal is to end the deductions employers can now take on tax-exempt benefits they give their workers.

"It does nothing to the employees," said Spitzer, an Arizona state senator.

Bush advocates a five-year, $483 billion tax cut, and says the only way to be certain that projected budget surpluses aren't spent by Congress is to refund most of the money to taxpayers.

McCain's alternative is a $237 billion overall cut, the closing of what he calls tax loopholes to offset part of the cost, and the commitment of additional budget surpluses to secure the financial future of Social Security.

The New Hampshire primaries are Feb. 1, eight days after the Jan. 24 Iowa caucuses.

A new ABC News-Washington Post poll showed McCain in a statistical dead heat here with Bush, leading 40 percent to 36 percent among likely Republican primary voters -- but within the 4-percentage point margin of error. The survey was conducted Jan. 13-16.

A Dartmouth College-Associated Press poll, conducted Jan. 9-12 and released Sunday, showed McCain leading Bush 42 percent to 33 percent among likely Republican voters.

McCain says Bush has mischaracterized his tax proposal.

"They're talking about income taxes," said McCain campaign spokesman Howard Opinsky. "We're talking about payroll taxes."

The Bush campaign based its assertion on Congressional Research Service estimates of the revenue loss due to the tax-free treatment of non-retirement fringe benefits aside from health insurance coverage and child care, which wouldn't be affected.

Bush's $40 billion claim reflects those estimates extended for five years after the next administration takes over. But the numbers are based on taxes paid by individuals, not their employers.

Bush was campaigning in New Hampshire today and part of Wednesday before returning to Iowa to campaign there exclusively until Monday's caucuses.

He also was expected today to be endorsed by former Virginia Gov. George Allen. Virginia's GOP primary is Feb. 29 and Bush already has been endorsed by Gov. Jim Gilmore and other state Republicans.

McCain, who is not actively campaigning in Iowa, planned to spend most of the week in New York and New England, attending fund-raisers and other campaign events.

In New Hampshire on Monday, McCain said he can identify gay people by their behavior and attitudes, The Washington Post reported today.

The topic came up as McCain engaged in freewheeling discussion -- as has become his custom -- with the traveling press corps. He said he served in the Navy with many gays, although he hadn't been told of their sexual orientation.

Asked how he knew they were homosexual, McCain said: "Well, I think we know by behavior and by attitudes. I think that it's clear to some of us when some people have that lifestyle." He later backtracked when pressed, saying "I said I had suspicions, and I think that -- I was told that they were (gay)," the newspaper said.