Candidates and tax cuts
Despite the election-year rhetoric which tends to play up their differences, the economic programs of the three major presidential candidates as well as tax-cutting efforts under way in Congress appear to recognize the importance of encouraging capital investment, increasing productivity, and easing the tax burdens on business to get the US economy moving again. Where the candidates differ is on how best to achieve this goal. But even those differences do not seem to be all that great.
Even the Anderson "difference" is not all that different, though Mr. Anderson's plan is more conservative than the Reagan or Carter tax-cut proposals. The most refreshing difference is his pledge to spell out in a detailed budget analysis exactly how muc his economic program would cost and how he plans to balance the budget before initiating promised tax cuts. Ordinarily political platforms are big on promises but scant on details about how they will be funded.
All three candidates, in fact, talk about tax cuts which are not reductions per se but moves to offset the hikes in social security taxes to take effect in January and the taxbracket "creep" brought about the inflated wages. Without a cutback, the taxes would go up $86 billion next year.
Like President Carter and Governor Reagan, Congressman Anderson emphasizes the need to promote savings and capital investment, and he would do this by offering a series of tax advantages for corporations and individuals. In addition to his 50-cent-per-gallon tax on gasoline, which he would return to individuals in lowered payroll and social security taxes, Mr. Anderson would use tax incentives to elicit management and labor cooperation in the fight against inflation.
Ironically, it is the Democratic president rather than his Republican challenger this year who is cautious. Mr. Carter would delay tax cuts to avoid pushing up the inflation rate; Governor Reagan's bolder plan calls for immediate across-the-board tax cuts to stimulate the economy. The Carter administration current recession withot drastic intervention by Washington. The 4.6 percent jump in the index of leading indicators in July would seem to bear out the Carter optimism.
The central message of all the tax proposals is significantly similar. It is that the United States in the '80s should boost production rather than consumption and, toward this end, lighten the tax load on business. It seems safe to say that, whoever is elected come fall, this will be an element of US economic policy. But it ought also to be kept in mind that the key to keeping inflation under control after a tax cut will be the Federal Reserve Board's monetary policies. Only if the Fed keeps a firm hand on the supply of moeny will the nation be assured steady economic growth.