BOTH Rick Lazio and Hillary Clinton have made a special effort to paint themselves as tax cutters--but they're not equally deserving of the title.
The key elements of Lazio's income-tax package would save New Yorkers about $4.2 billion a year, according to a Manhattan Institute analysis of the two candidates' proposals; Mrs. Clinton's plan (to the extent details are available) would save New Yorkers $1.2 billion.
And the differences go beyond the numbers. Lazio's plan is the broader and more straightforward of the two. It would:
* End the so-called marriage penalty by raising the standard deduction for joint filers and raising the ceiling on the 15 percent tax bracket, which translates into big savings for many couples whose last dollar is now taxed at the 28 percent rate.
* Let most taxpayers deduct their Social Security tax--which is now 6.2 percent of the first $76,200 in wages.
* Repeal a 1993 increase in taxes on Social Security benefits for seniors earning $45,000 or more.
Lazio limits his payroll-tax deduction to taxpayers in the first two tax brackets, so there would be no deduction at all for a couple with more than $105,950 in taxable income, or a single person with taxable income of more than $63,550. Clamping on an income limit like this is neither fair nor sensible--but at least Lazio would provide much more outright tax relief for a wider range of people than would benefit under his opponent's plan.
Mrs. Clinton has proposed tax cuts only a control freak could love--a series of narrowly targeted credits designed to reward those who engage in the "right" behavior or find themselves in the "right" circumstances.
Her plan boils down to this: If you are caring for a severely disabled relative in your home ... or have a child in day care ... or if you, your spouse or a dependent are attending college ... or if you are married but don't own your home--if you meet one or more of these qualifications, then you might qualify for an expanded version of an existing tax credit. Then again, you might not--especially if you are a middle-class family in New York City or one of its suburbs.
If, on the other hand, you are a low-income worker paying little or no income tax but receiving a refund from the federal government, there's a much better chance that your refund will grow under Mrs. Clinton's plan.
And if all this sounds familiar, it's because her tax credits are essentially the same as those in Vice President Al Gore's income tax package--most of which, in turn, was lifted out of President Clinton's last budget. As in Gore's plan, Mrs. Clinton's tax benefits drop as income rises--effectively discriminating against millions of middle-class taxpayers in New York.
In fact, Lazio's combination of broad marriage-penalty relief and payroll-tax deductions will generate significantly greater tax relief for most middle-class taxpayers--even the families that Mrs. Clinton targets for benefits.
Take, for example, a New York City working couple with an income of $84,300 and a child at an expensive private college. The comparative tax savings: $1,230 from Mrs. Clinton's much-touted college tuition deduction, and about $2,100 from Lazio's cuts. If the student goes to CUNY or SUNY, where tuition is much lower, the benefit under Mrs. Clinton's plan drops to less than half as much. But the couple's savings from Lazio remain the same.
In addition to the targeted credits mentioned in Mrs. Clinton's speeches and on her Web site, her campaign now says she also supports income-tax credits for retirement savings that would generate a further $1.8 billion a year in benefits for New Yorkers. If this plan is modeled after Gore's, as her campaign says, then the bulk of the money will go to low-income taxpayers rather than to middle-class families.
That addition to Mrs. Clinton's tax-cut package simply makes it an even more massive transfer of wealth from high-cost, high-income states like New York to low-income states like Arkansas.
The bottom line for New York taxpayers: While Lazio's plan doesn't have enough in common with George W. Bush's across-the-board approach, Mrs. Clinton's is all too similar to Al Gore's "target" practice.
Original Source: http://www.manhattan-institute.org/html/_nypost-rick.htm