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Clinton Calls Proposal to Scrap Current Tax Code 'Misguided'

By Jonathan Peterson
Los Angeles Times
WASHINGTON

Facing an unexpected stampede in Congress to wipe out the U.S. tax code and replace it with a radical overhaul, President Clinton on Monday denounced the approach as "misguided, reckless and irresponsible," and warned that it would imperil the economy.

In an unusually pointed attack, Clinton and his top advisers assailed popular legislation in the House and Senate that would have the current tax code expire on Dec. 31, 2001, to make way for a wholly new version.

"No one concerned about fighting crime would even think about saying, Well, three years from now we're going to throw out the criminal code, and we'll figure out what to put in its place,' " Clinton told the National Mortgage Bankers Association. "No one would do that. That is what this proposal is. That is exactly what some people in Congress are proposing to do."

At the same time, Clinton acknowledged he was on risky terrain, given public disenchantment with the Internal Revenue Service and the widely panned tax system it oversees.

He too gets "outraged" by IRS abuses, he said, and has supported reforms, including a Taxpayer Bill of Rights designed to help the public cut through red tape and recover costs in lawsuits.

Noting that no one "ever wants to say" anything positive about the IRS or the tax code, Clinton conceded, "This is a hazardous discussion that it's easier to enter into maybe because I'm not on the ballot anymore."

The plan to "sunset" the nation's tax code sounds "almost irresistible," Clinton said, "but so was the siren song."

The president's comments were prompted by a surge in support for identical House and Senate proposals intended to spark a nationwide debate on eliminating the tax code.

Senate Majority Leader Trent Lott (R-Miss.), backed by the entire Republican leadership of that chamber, has pledged that a measure to wipe out the tax code will be brought up for a vote this year. The House version, sponsored by Rep. Steve Largent (R-Okla.), now has 143 co-sponsors.

Meanwhile, the National Federation of Independent Business, an influential small-business lobby, has embarked on a campaign to scrap the tax code, and is collecting what it hopes will be 1 million signatures for the cause.

Confident that they have struck a vein of popular sentiment, the anti-tax code advocates quickly shot back at Clinton Monday: "With less than six weeks left before Americans must file their tax returns, President Clinton has once again shown himself to be out of touch with the plight of the American people," said Sen. Tim Hutchinson (R-Ark.), a sponsor of the Senate bill.

"We anticipate that it will be voted on this spring, and it will pass," Largent aide Terry Allen said of the proposal.

Under the legislation, a replacement tax code would be passed by July 4, 2001, several months before the current system would expire, and it could be phased in gradually. But legislators have yet to agree on what the replacement would look like, other than that it would be simpler than today's model. Calls for a national sales tax or a flat tax, in which brackets and deductions would mostly be eliminated, have champions as well as critics.

Proponents of a new tax system maintain that the current jumble of rules suppresses economic growth and prosperity.

"Starting from scratch, Congress, the president - and most importantly, the American people - would be able to design a fairer, simpler tax code," Hutchinson said.

Republicans also argued that their plan to set a deadline for the tax code served a practical benefit, by creating pressure for change of a system that has been resistant to major reforms.

Clearly, the White House is aware of the sensitivities of the issue.

We "are making changes, and must continue to do so," Clinton said of reforming the IRS.

Still, the president and his aides argued that the proposals threatened to wreak havoc with the economy, because uncertainty about taxes could inhibit all sorts of investment decisions.

"Scrapping the home mortgage deduction, scrapping other middle-class tax cuts without presenting a clear alternative is simply reckless for the economy, reckless for businesses, reckless for families' budgets," said Clinton, deriding the "sunset" approach as an "irresponsible" and "misguided" one that he would not permit if he could help it.

"With no ability to predict the consequences," he added, "businesses might decide to postpone, cancel or pare back on plans to buy new computers, build a new factory, hire new workers."