Dean Debates Tax Cut for Middle Class

BURLINGTON, Vt. – Howard Dean's (search) advisers said Wednesday they are considering a new proposal to reduce the tax burden on the middle class as he faces increasing criticism that his economic policies would take money from working Americans.

Several of Dean's rivals made taxes the centerpiece of their challenge to the Democratic presidential front-runner in two debates this week in Iowa, where Democratic strategists and pollsters say the race is tightening less than two weeks before the Jan. 19 caucuses.

Dean rival John Kerry (search) planned to begin airing a television ad Thursday in Iowa that criticizes Dean and Missouri Rep. Dick Gephardt (search) for their plans to erase all of Bush's tax cuts if elected.

"I don't think we should be asking the middle class to be the people who are going to pick up for George Bush's mistakes," Kerry says in the ad.

Dean wants to use the money from repealing Bush's tax cuts to help balance the budget, pay for spending programs such as health care and education, and make the tax system fairer. Dean spokesman Doug Thornell said the campaign is discussing a new proposal to do that.

Dean would not comment on his plans, other than to release a statement reiterating his support for a fairer tax code (search).

"As I have consistently said since November 2002, I will propose additional tax reforms that will make the tax code fairer for working families and that will ensure that corporations and the wealthy pay their fair share," he said.

The campaign would not provide details, including when the plan will be made public. Gina Glantz, a senior adviser traveling with Dean, suggested it would be released after Bush sends his fiscal 2005 budget to Congress on Feb. 2 - after voters in Iowa and New Hampshire choose a Democratic candidate.

Dean in the past has talked about reducing income tax paperwork and closing corporate tax loopholes. Thornell said Dean has never ruled out a middle class tax cut of his own.

Gephardt also wants to repeal all of Bush's tax cuts to pay for his plan to provide health care for nearly all Americans. His plan is to offer a new version of the child tax credit (search), marriage penalty relief and estate tax relief.

"Dick Gephardt doesn't believe that we are going to win this election by retaining some large part of Bush's failed economic plan," said Gephardt spokesman Erik Smith.

Dean argues that Bush's tax cuts have not helped the middle class because they have been offset by service cuts and higher property taxes. His stance is a point of contention with rivals such as Massachusetts Sen. John Kerry, Wesley Clark, North Carolina Sen. John Edwards and Connecticut Sen. Joe Lieberman, who argue that only Bush's tax cuts targeted to the wealthy should be repealed.

Kerry's ad features Elizabeth Hendrix, a single mother of four from Des Moines who makes $28,000 a year. Kerry says she would lose $1,800 if all the Bush tax cuts are eliminated.

The ad doesn't name Dean or Gephardt - Kerry's chief rivals in Iowa - but Kerry's campaign said it is meant to highlight their positions.

Clark spokesman Matt Bennett questioned Dean's timing. On Monday, Clark announced a plan to eliminate taxes for families of four earning less than $50,000 a year.

"Howard Dean seems to have a secret plan for middle class tax cuts that was hatched immediately after Wes Clark announced his real plan for sweeping tax reform and relief for working families," Bennett said.

Edwards also criticized Dean's shift.

"The American people won't have to guess what I'll do as president," Edwards said. "They know, and I haven't changed my mind."

Earlier last year, Dean talked about repealing at least parts of Bush's tax cuts but considered leaving the child tax credit, marriage penalty (search) relief and perhaps some breaks for people who inherit limited estates. But when Bush signed his second major tax cut bill last May, Dean said he would raise taxes back to the levels under former President Clinton and put the nation's fiscal house in order.

"You cannot promise people tax cuts, college education, health care and whatever else you want, and say, 'Oh, it'll all be fine,'" Dean said Tuesday during a debate on National Public Radio. "That's what George Bush is doing."

The Boston Globe reported Wednesday that Dean's decision comes after his economic advisers, concerned that his position could be politically fatal in the general election, unanimously recommended that he back middle class tax cuts to offset the repeal of Bush's.