Dole to offer tax cut of 15% Proposal would trim $541 billion over 6 years, advisers say; Announcement today; Plan would affect 90 million taxpayers, offer child tax credit; CAMPAIGN 1996

WASHINGTON -- After considering a variety of options, Bob Dole has decided to make a 15 percent, across-the-board tax cut the centerpiece of the economic plan he will unveil today, aides said last night.

The $541 billion proposal, which Dole is scheduled to formally announce in Chicago, will call for the tax cut for 90 million taxpayers to be phased in over three years.


Included in the six-year tax cut plan is a $500 per child tax credit, which would be phased in over two years, beginning with a $250 per child credit in 1997.

Republican presidential campaign aides said Dole will call for a 50 percent reduction in the capital gains tax, which would drop immediately from 28 percent to 14 percent.


The total package, which will also include smaller items, such as expanded IRAs, small-business incentives and an education tax credit, would be largely financed by spending cuts. But about 27 percent of the cost would be made up through projected increases in tax revenue, aides said.

This latest decision means a rejection of an alternate proposal to repeal the income tax rate increases enacted in 1993 as part of President Clinton's deficit reduction effort. The only 1993 tax Dole is expected to try to repeal is an increase in the amount of Social Security income subject to taxes.

Another alternative that has been dropped is a proposal to make Social Security payroll taxes deductible from income tax liability.

In putting together his tax cut package, Dole has had to navigate through a thicket of often competing concerns, including overall cost, how to meet his target of balancing the budget by 2002 and how to avoid contradicting a career-long record of fighting the deficit.

Already, the White House and the Clinton campaign are attacking Dole for seeming to turn his back on his own principles of fiscal austerity.

Leon E. Panetta, Clinton's chief of staff appearing on CBS' "Face the Nation," said Dole deserves "the gold medal for flip-flop. Because for 35 years, he has basically talked against just providing tax cuts without aiming at the deficit."

And White House economic adviser Gene Sperling said the measures expected to be outlined by Dole would cost more than $800 billion, rather than the $548 billion Dole will claim. He called the expected package "a collection of gimmicks, double-counting and voodoo growth assumptions."

But GOP aides insist that the Dole package will be based on conservative numbers, that he is not risking an increase in the deficit, but simply acting to give the stagnant economy a boost.


Dole aides believe the way he can best make up ground against Clinton in the still lop-sided campaign is to convince voters that he can help them overcome stagnant wages and financial insecurity.

"We'll lay it all out there," Dole said yesterday as he headed toward another day of meetings with economic and campaign advisers at his Washington headquarters.

His economic agenda is the first of three major steps Dole will take in the next two weeks in an attempt to grab the attention of voters unimpressed with his campaign.

The other two will be his choice of a vice presidential running mate, scheduled to be announced Saturday in his hometown of Russell, Kan., and his speech accepting the Republican nomination at the party convention in San Diego the following Thursday.

Long skeptical of tax cuts because they might add to the federal budget deficit, Dole worked to the last day preparing a plan that would be bold enough to boost his campaign but fiscally responsible enough to allow him to promise a balanced budget in six years.

As late as Saturday, he appeared reluctant to accept the biggest tax proposal advocated by his advisers -- the 15 percent cut in income tax rates.


But by yesterday, while promising a balanced budget, Dole was ready to sign onto the kind of huge tax cut pushed by devotees such as former campaign rival Steve Forbes and Sen. Spencer Abraham, a Michigan Republican. Forbes and Abraham are scheduled to be with Dole on his trip to Chicago today, explaining his plan to reporters.

In another move yesterday, the Dole campaign offered to amend the "tolerance plank" it has insisted be added to the Republican Party platform.

This section was designed by Dole advisers as an olive branch to those who disagree with specific policy planks, and was crafted primarily as a gesture to GOP moderates who support abortion rights. The measure names abortion and capital punishment as examples of potential disagreement.

Christian Coalition Executive Director Ralph Reed said he welcomed Dole's gesture but also said it is not enough.

"We continue to believe that the tolerance plank should not be abortion specific because it sends the wrong signal to millions of evangelical and Roman Catholic voters," Reed said in an interview.

Abortion foes are confident they have the votes to prevail in the platform subcommittee that will write the abortion-related language.


Pub Date: 8/05/96