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OCR Page 1 of 37talker pounts 1 clinted Trenty
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THE WHITE HOUSE
WASHINGTON
April 12, 1995
MEMORANDUM FOR THE PRESIDENT
FROM:
Gene Sperling, Robert Gordon, Theo Lubke
SUBJECT:
Q&A for CNN Interview
The following includes Q&A in the following subject areas:
1.
Flat Tax/Tax Pledge/Veto
2.
Budget and Entitlements
3.
Education
4.
School Lunches and Block Grants
An addendum on the dollar from the Department of Treasury is attached.
FLAT TAX/TAX PLEDGE/VETO
Q:
FLAT TAX: What do you think of current proposals, like the flat tax or a broad
consumption tax, that would significantly reform the tax code to make it less complex
and burdensome?
A:
I'm willing to consider any serious proposal to simplify the tax code and make doing
income taxes easier while still keeping it fair for working families. I fear, however,
that some of these attempts are nothing more than a veil to cover a shift in tax
burdens which will make the tax code more regressive and balloon the deficit.
Because these proposals are much more complicated than their advocates claim, they
must be seriously analyzed and subjected to a thorough national debate before we can
take any action.
Flat taxes tend either to explode the deficit or to make the tax code far less fair.
For example, when the Treasury Department analyzed one recent proposal, it found
that the effect would be either to explode the deficit or to require that taxes for every
taxpayer earning under $200,000 go up so that those earning over $200,000 could get
a tax break averaging over 25 percent.
In addition, many of these proposals would eliminate the home mortgage deduction or
the deduction for charitable giving, while raising the burden for middle-income
families. They are not likely to be popular.
Flat tax proposals tend to have the same distributional effect as the Contract with
America--requiring cuts for the middle class in order to help the wealthy. The more
closely you examine the fine print, the worse the flat tax proposal looks.