ROANOKE TIMES 
                      Copyright (c) 1996, Roanoke Times

DATE: Friday, July 26, 1996                  TAG: 9607260048
SECTION: NATIONAL/INTERNATIONAL   PAGE: A-1  EDITION: METRO 
DATELINE: HARRISBURG, PA. 
SOURCE: Associated Press note:above 

DOLE WOULD REDUCE IRS $600 BILLION CUT IN TAXES MIGHT BE HEART OF PLAN

Bob Dole, unveiling more key components of his economic package, said Thursday he would shrink the IRS and limit its scope. His aides suggested the plan's centerpiece could be a six-year tax cut of up to $600 billion.

Dole told a business group that his plan - now expected to be released early next month - also will propose exempting small-business investments from capital gains taxes so long the proceeds are ``invested in a new small business.''

Capital gains are the profits from sales of real estate, stocks or certain other investments. They are currently taxed at a maximum rate of 28 percent.

Dole insisted he's made no decision on the overall economic package.

He has said the package would include a major tax cut, and he is known to be considering two major variations - an across-the-board cut of up to 15 percent, or a repeal of the 1990 and 1993 tax increases with a return to the lower tax brackets that were in place in 1986.

Either plan would cost about $100 billion a year, or $600 billion over six years. That time length was selected because of GOP vows to balance the federal budget by the year 2002.

Dole's remarks came amid new published reports that he was considering a range of strategies to help pay for the $600 billion.

The Washington Post, in Thursday's editions, quoted what it said was a campaign working paper that suggested 40 percent of the additional revenue would come from projected stronger growth of the U.S. economy. It also listed closing corporate tax loopholes, better enforcing customs laws, reducing the federal work force and cutting more in domestic spending.

The overall concept of a six-year $600 billion tax cut is ``under serious consideration,'' said Dole spokesman Nelson Warfield.

He called the Dole economic plan ``a work in progress'' and said details included in the working paper were ``entirely consistent with Bob Dole's long commitment to fighting excessive taxation.''

However, Dole has a history of opposing massive tax cuts. Some colleagues have said he has expressed discomfort with a 15-percent across-the-board tax cut, which many of his political advisers recommend.

Dole told his audience of small business owners Thursday, ``We haven't announced [the economic plan] yet. Others have. It's not my announcement and it's not my plan.''

He did tell his audience that limiting the size and power of the Internal Revenue Service would be a key component.

``We can downsize the IRS. We can make taxes fairer, flatter and simpler,'' Dole said.

Dole's attack on the IRS and his comments on simpler taxes reflect a theme popularized earlier this year by magazine publisher and unsuccessful presidential candidate Steve Forbes. Forbes has been to see Dole several times in recent weeks to offer economic advice.

Simplifying the tax code would be one way Dole could shrink the IRS. Aides said he is also considering changes in audit procedures, such as changing the burden of proof in audit cases from the taxpayer to the government.

Another proposal would allow interest and penalties to be waived in cases where the IRS is ruled to have been at fault.

Dole is already locked into a proposed tax credit for charities that fight poverty - of $500 per person. That proposal, announced in May, would be in addition to the existing tax deduction for charitable giving. His own staff estimates the charity tax credit would cost $15 billion to $20 billion a year.

Other proposed tax cuts under Dole's consideration:

* Allowing workers to deduct their payroll Social Security taxes from their gross incomes.

* The $500-per-child ``family'' tax credit the GOP Congress has passed but which President Clinton rejected.

* Deductions for interest on student loans.

* Partial restoration of the tax break for Individual Retirement Accounts.

LENGTH: Medium:   83 lines
ILLUSTRATION: PHOTO: AP    Bob Dole is  considering an across-the-board tax 
          cut of up to 15 percent, or a repeal of the 1990 and 1993 tax 
          increases. color.
KEYWORDS: POLITICS PRESIDENT