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Dole Planning to Reveal Tax-Cut Next Week In Midwest

July 31, 1996

WASHINGTON (AP) _ Bob Dole is being urged by senior economic advisers to make the centerpiece of his economic package a repeal of the 1990 and 1993 tax increases, rather than a 15 percent across-the-board tax cut, GOP and campaign officials said Wednesday.

Campaign officials, speaking on the condition of anonymity, said the Republican presidential candidate hopes to formally unveil his plan on Monday in Detroit.

``We’ll do that announcement in just a few days,″ Dole told a group of Nashville small business owners, who sat down Wednesday to talk taxes with the candidate in a scripted roundtable session.

Promising a ``very good″ reduction in the capital gains tax rate, Dole is already bracing for Democratic charges of helping the rich.

``As soon as we announce it, the cry is going to be, `Oh, this is for the rich. This is for Wall Street,‴ Dole predicted. But he argued the tax cut would free $7 trillion in ``locked up assets″ and generate job growth.

In writing his economic package, Dole is still trying to find ways to pay for tax cuts, which would be in the $500 billion to $600 billion range over six years, those close to the process said.

Advocates of the across-the-board cut, who now find themselves in a minority among Dole’s advisers, were making a final pitch.

Repealing the 1990 tax increase supported by then-President Bush and the 1993 one that Dole regularly blames on Clinton appears to have emerged as the leading option.

One major problem for Dole if he goes along with the twin-repeal scheme: he would have to reconcile such a position with his own vote for the 1990 tax increase.

Dole, who spent much of the morning working on the plan with his economic advisers, was said to be close to a decision.

Deciding between the two rival tax plans was his last major decision on the economic package. But it’s a particularly hard one for him, since he has a long history of preferring to cut the deficit over cutting taxes.

Detroit was selected as the site for his speech because the former Senate majority leader wants to spotlight the recent economic recovery of former rust-belt areas, and to suggest that his ``pro growth″ economic plan would foster even greater recovery, aides said.

The Midwest will also be a key electoral battleground in the fall election.

Before flying to Nashville for campaign events, Dole met in his campaign headquarters with top advisers, including senior policy adviser Donald Rumsfeld, who was a former top official in the Nixon and Ford administrations; former Rep. Vin Weber of Minnesota and John Taylor of Stanford University, who has become his leading outside economic adviser.

Those close to the negotiations said that Dole was very close to making up his mind, but had not signed off on any plan.

``It’s probably imminent but there’s no need to rush it. He wants to get it right,″ Weber told CNN.

Weber remains in the camp of those favoring a 15 percent across-the-board tax cut, while Rumsfeld and Taylor have reportedly been advocating repealing past tax increases.

Also speaking forcefully for repealing the tax increases of 1990 and 1993 are Dole’s defeated GOP rival Steve Forbes and former New York congressman and Bush administration Cabinet member Jack Kemp.

They argue such a scheme would bring the tax system closer to the kind of flat tax Forbes advocated during his campaign.

In essence, repealing those two tax increases would leave tax rates at their levels of 1986, when an earlier tax-simplification act was passed. The current top rate of 39.6 percent would be cut to 28 percent.

Since such a repeal would tend to help the wealthiest Americans, it is expected to be coupled with a separate tax break aimed at helping middle-income Americans.

The leading candidates: allowing workers to deduct from their gross incomes the amount they pay each year in Social Security payroll taxes.

One of few details Dole revealed Wednesday amends an earlier proposal to allow self-employed workers to deduct their full health insurance costs. Dole said he would allow deductions of up to 80 percent instead.

Dole has already said his plan will lower the capital gains tax, overhaul and downsize the Internal Revenue Service, provide an additional $500-per-person tax credit for contributions to poverty-fighting charities and provide new tax breaks for small businesses.

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