Congress

Dick Gephardt's Beautiful Mind

Or, how to simplify taxes by complicating them.

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House Minority Leader Richard Gephardt recent called for an economic summit aimed at figuring out how to "simplify the tax code." The Missouri representative also said "the first $10,000 of your education should be tax deductible." If that sounds a tad inconsistent, consider what he said a few days earlier in a speech to the Democratic Leadership Council.

Gephardt urged tax incentives for partnerships between universities and small businesses, investment in renewable energy, the purchase of fuel-saving vehicles, and improved energy efficiency in new buildings. He would also increase the Earned Income Tax Credit, make refundable the $500 child tax credit, and make permanent the credit for contributions to retirement savings plans.

Simplifying the tax code means getting rid of deductions and credits in exchange for a lower rate. It's tough to do that when you're adding deductions and credits.

Gephardt is hardly the first politician to take contradictory tax positions. In 1996 GOP presidential candidate Bob Dole called for "a fairer, flatter, simpler tax system" while simultaneously pushing for adoption tax credits, IRAs for homemakers, and other preferences. But Gephardt is unique in that he has been contradicting himself so brazenly for so long.

As a junior House member in the late 1970s, he supported tax credits for private and parochial school tuition. In 1987 he told The New York Times he no longer favored such credits because the Internal Revenue Code should not be "cluttered with credits and deductions." Now he's back to pushing tax deductions for educational costs.

In 1981 Gephardt voted for the Reagan tax cuts. When he ran for president in 1988, he defended that position, which his aides saw as a winner. "[Sen. Paul] Simon and [Gov. Michael] Dukakis stumbled into it, criticizing us on taxes," his deputy campaign manager told the Los Angeles Times. "If they want to talk about how Dick Gephardt voted to cut taxes in New Hampshire, we said, sure, we'll talk about that."

Last year Gephardt cited the Reagan cuts to denounce the Bush cuts. "People like me got calls from my constituents in 1981 saying, 'Give Ronald Reagan a chance,' " he said. "Well, after we lost our alternatives, people like me gave him a chance. I voted for the Reagan tax cut in the end in 1981. It was a mistake."

Speaking in Iowa in July 2001, Gephardt suggested that the 1993 tax increase was a model: "I'm glad we did what was right in 1993, and I'll do it again because I believe in being fiscally responsible with the taxpayers' money." A few days later, he issued this statement: "I never addressed the future of taxes in my remarks because I don't believe they need to be raised."

In the 1980s, Gephardt sponsored legislation to overhaul the tax code by scrapping tax preferences. He told a group of business executives in 1985, "I feel more comfortable with the free market system deciding where capital should be allocated than with Dick Gephardt planning it."

In the 1990s, Gephardt proposed another major overhaul, which would have reduced tax rates by repealing nearly all itemized deductions. In a debate with Jack Kemp, he explained that he wanted everyone on a level field. "If you go out and earn your wages every day by working, you get taxed at a certain rate," he said. "If you earn by investing in capital…then you will pay at a similar rate. Why do you want to prefer one set of actions over another?"

A striking feature of this proposal was a requirement for a national referendum before any increase in tax rates. In 1995 Gephardt said such a requirement was necessary to block costly tax breaks. "When people look at tax reform," he said, they think, " 'Oh, sure, there they go again. They're going to lower my rates and they'll be back in two years opening up some more loopholes for rich people, and I'm going to pay through the nose.' "

Yet even before his 2002 tax credit fusillade, Gephardt was supporting tax preferences for individuals and businesses. The Web site for his 2002 re-election campaign includes this boast: "Dick Gephardt has consistently co-sponsored the Historic Home Ownership Assistance Act, which provides a Federal tax credit to individuals who rehabilitate historic homes."

Such wild contradictions could prove a handicap if Gephardt seeks the presidency again. His spinmeisters might try to contain the damage by recalling a famous quotation from F. Scott Fitzgerald: "The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function."

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