DATE: Sunday, March 16, 1997                TAG: 9703140021

SECTION: COMMENTARY              PAGE: J4   EDITION: FINAL 

TYPE: Editorial 

                                            LENGTH:   47 lines

NO CUTS, NO REFORM DESPITE CAMPAIGN PROMISES, TAXES SEEM LIKELY TO REMAIN UNCHANGED

It's become a campaign ritual. Candidates run in favor of tax cuts and against tax increases. But once in office, fiscal realities take precedence over campaign rhetoric.

The campaign of 1996 promised a middle-class tax cut and a balanced budget. Presidental candidates of both parties and those running for House and Senate all paid lip service to the impossible dream. The public largely ignored the nonsense and were branded cynical for their pains.

Well, the cynics have been proved realists. Last week it became clear the tax cuts aren't going to happen. Earlier the Clinton adminstration had submitted a ``balanced budget'' that actually fell $60 billion short of balance. Now, House whip Tom Delay, R-Texas, suggests the Republican strategy should be to pursue a balanced budget first and tax cuts later.

Some top Republicans don't share his view. Majority Leader Dick Armey, R-Texas, still promises tax relief this year. But the boat may have sailed. The White House welcomed Delay's remarks. And the so-called Blue Dog Democrats who favor conservative fiscal policies and may hold the swing votes in a narrowly divided Congress have long favored balance first, tax relief later. That surely makes sense.

On a tangentially related issue, the news is less good. Whether taxes rise or fall, the way we are taxed is a disgraceful mess. It is convenient to blame the IRS, and it has certainly been less than a model of friendly and efficient service.

But the byzantine tax code the IRS enforces is the work of Congress. Reform is needed to strip away the thousands of subsidies, loopholes, credits, deduction and other special breaks that members of Congress enact to please constituents. They distort markets, shift the tax burden to the average taxpayer and unfairly reward the well-connected.

Unfortunately, Ways and Means Chairman Bill Archer, R-Texas, now predicts no tax reform is possible because Republicans can't agree among themselves on which grand scheme to adopt. Flat taxers duel progressive taxers and both are anathema to VAT enthusiasts.

Thus, the ideal is the enemy of the possible and the result is likely to be the same old unfair, expensive, complicated code that results less from rational tax policy than from influence, favor and the well-placed campaign contribution. If a tax break isn't possible until a balanced budget is achieved, perhaps tax reform isn't possible until campaign-finance reform is achieved. It could be a long wait. And April 15 looms.

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