KINDER'S COMMENTARY: FLAT TAX DESERVES RED-LETTER DAY

"What voters saw in the flat tax was a road to political reform and a weapon to strike out at those who manipulate the tax code. They understood that when you create a flat tax, you wipe out a whole source of political corruption in our society." -- Sal Russo, a political consultant who has measured voter support for some form of flat rate of taxes on income.

Mark down Wednesday, Jan. 17, 1996. It may turn out to be the most important day of the 1996 campaign and a true milestone in American history. It was this day that former Housing and Urban Development Secretary Jack F. Kemp announced the report of his special tax commission. Appointed last year by Senate Majority Leader Bob Dole and House Speaker Newt Gingrich with Kemp as chairman, the commission held a series of hearings nationwide. The commission's charge was twofold: 1) to gather public comment concerning how our current tax code over-taxes Americans, punishes savings, increases the cost of capital, hinders productive enterprise and generally gums up life, and 2) how to reform that tax code so as to radically simplify it, reduce these burdens and unleash Americans in an unprecedented explosion of economic growth.

Kemp is the perfect leader to have chaired such a commission. It was Jack Kemp's tireless advocacy and missionary zeal that changed the Republican Party fundamentally and brought about the supply-side tax cuts of the 1980s. Prior to Kemp, Republicans since Herbert Hoover had been mired in what some writers called "root canal economics." By this vivid term, critics meant that Republicans, obsessed with balanced budgets and cutting spending -- akin to the pain of root canal -- had no positive vision and no soaring rhetoric with which to inspire the American people.

In the fall of 1979, Kemp paid a visit to Southern California, there to convert former California Gov. Ronald Reagan to the new supply-side gospel of lower marginal tax rates as a way out of the stagflation and malaise then gripping Americans during the Jimmy Carter era. A persuaded Reagan made the Kemp-Roth tax cut the centerpiece of his campaign and swept in an historic landslide. Once enacted, the tax cuts spurred 98 straight months of economic growth in the longest peacetime economic expansion ever and nearly 20 million new jobs. For good measure, the astonishing success of Reaganism launched a freedom tide worldwide that has yet to ebb.

Writing this week, New York editor and columnist Bob Bartley has this to say about what the commission has produced:

"The Kemp commission complains, for example, about the current law's bias against savings. If a family in the 28 percent bracket earns an extra $1,000, it keeps $720. If it spends $720 on a trip to Disneyland, its members 'incur no further federal tax, no matter how many times they ride the Space Mountain.' If they save and invest the $720, however, they incur a whole stream of additional taxes -- the corporate tax, the tax on dividends, an eventual tax on capital gains, an estate tax on death. Instead, the commission proposes 'a single low rate, taxing income only once.'"

Bartley continues, placing in context a revolutionary idea soon to become the centerpiece of this year's Republican campaign: "As with the balanced budget, welfare and much of the new Republican proposals, the reassessment challenges much of the old order. The Kemp commission is not merely proposing to debate the arithmetic of taxation; it is starting to reassess the morality of taxation. It does not propose to repeal the 16th Amendment, but does challenge the (older) definition of income: To avoid the bias toward Disneyland instead of savings, 'the tax system must either let savers deduct their savings or exclude the returns on savings from their taxable income.'

"And for income that is taxed, ... it proposes a new kind of fairness: 'For taxable income above the personal exemption, if one taxpayer earns ten times as much as his neighbor, he should pay ten times as much in taxes. Not twenty times as much -- as he would with multiple and confiscatory tax rates. Not five times as much -- as he might with special loopholes. Ten times as much income, ten times as much taxes. That's the deal.'"

Speaker Gingrich concluded with this pithy summation: The ball is in the president's court. He now either offers his own plan to radically overhaul the tax code, or he digs in to defend the status quo.

Your move, Mr. President.

~Peter Kinder is the associate publisher of the Southeast Missourian and a state senator from Cape Girardeau.