AllPolitics - Spin Patrol

Dole's Flat Tax Ad Misleads

By Brooks Jackson/CNN

WASHINGTON (Feb. 6) -- With the important Iowa and New Hampshire contests fast approaching, Sen. Robert Dole and publisher Malcolm S. "Steve" Forbes Jr. are continuing to spar over Forbes' proposed flat tax and its effect on middle-class Americans.

Dole's campaign says Forbes' flat tax would soak middle-class homeowners, and the controversy started last week with a Dole campaign ad featuring New Hampshire Republican Governor Steve Merrill, a Dole supporter.

[Dole ad]

Here's what the ad said: "The typical New Hampshire household will pay $2,000 more in taxes, and we lose our property tax deduction and our mortgage interest deduction." The next day, Forbes struck back with a simple denial in a TV spot of his own. "Now they're misleading you about the flat tax," Forbes' ad said. "The truth is, under Steve Forbes' flat tax, families pay less, not more. If you have a home mortgage, you pay less, not more."

But the Dole camp has insisted its ad is true, that homeowners would pay more, and it refused to pull the ad off the airwaves.

So Forbes launched a new ad, citing a newspaper's critique of Dole's ad. "The Concord (N.H.) Monitor reports Bob Dole's negative ad, with Steve Merrill, is not accurate. The Monitor stated Dole 'ignored exemptions' that cut taxes. The Monitor concluded an average family's tax bill under Forbes' plan will be $4,420 lower, not $2,000 higher, as Dole claims."

[Forbes ad]

So what gives? Would homeowners actually pay more under a flat tax? Several studies say no. The business-backed Tax Foundation looked specifically at the Forbes tax proposal and concluded it would lower taxes at all income levels, while raising the federal deficit by $173 billion a year.

The labor-backed Citizens for Tax Justice concluded that the Forbes plan, as proposed, would cut taxes for all people earning more than $10,000 a year, but would also add $210 billion a year to the deficit.

Earlier studies reached similar conclusions. The American Institute of Certified Public Accountants said a similar flat tax "appears to provide tax relief to nearly all individual taxpayers." And the Institute for Research on the Economics of Taxation said a similar tax plan "provides a net tax reduction for nearly all households."

[Forbes ad #2]

So, then, what about the Dole ad's claim that a typical family would pay more? It's misleading. It was based, it turned out, on a one-page study done for the New Hampshire real estate lobby, and it does not evaluate the specifics of the Forbes plan at all.

Today, Gov. Merrill insisted again that the ad is accurate, but cited a different authority: the Congressional Budget Office. Merrill said the budget office says 28 million households would see their taxes jump by over $2,000, and that New Hampshire would be especially hard hit because many people there own property. "We really get hurt in New Hampshire," Merrill said. (149K AIFF sound or 149K WAV sound)

But the Congressional Budget Office said nothing about Forbes' proposed flat tax. All it said was that eliminating the home mortgage deduction, and doing nothing else, would raise homeowners' taxes. That is not what Forbes proposes, though.

What Forbes proposes amounts to a massive tax cut, possibly a budget-buster, but hardly a tax increase on homeowners.

[Spindex '96]

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