Treasury Secretary Robert Rubin says a GOP plan to abolish the income tax code without specifying a replacement "is a genuinely terrible idea" that could ruin the economy.
But against the anti-IRS and anti-tax backdrop in Washington, Republicans were optimistic the bill would pass the House."Yes, the votes will be there," House Majority Leader Dick Armey, R-Texas, told reporters Tuesday.
At issue is the Tax Code Termination Act, sponsored by Rep. Steve Largent, R-Okla., which is scheduled for a House vote today.
Largent's bill would prevent the government from assessing any taxes under the current code after Dec. 31, 2002, as long as a simplified replacement tax system was in place by July 4, 2002.
Amid the debate over abolishing the tax code, House Speaker Newt Gingrich was considering the outlines of a new tax cut bill.
"We'll probably do the tax bill in early September," Gingrich, R-Ga., told reporters.
He predicted such a measure could begin to phase out the so-called marriage tax penalty, create individual Social Security investment accounts and reduce the capital gains rate from 20 percent to 15 percent. Gingrich also favors reducing the holding period for the capital gains tax break to 12 months from 18 months.
Publisher Steve Forbes, an expected GOP presidential candidate and advocate of a simplified or "flat" tax, said the vote on the scrap-the-tax bill was "one of the defining votes of the 1998 debate."
"The issue is simple: Who's for the IRS, and who's against it? Who thinks the anti-family, anti-small business tax code is fine just the way it is and who's for real change?" Forbes said in a statement.
Advocates say the bill would create the necessary political pressure for Congress to fashion fundamental tax changes through a flat tax or national sales tax.
Rubin, known for carefully choosing his comments on the economy, sketched a harsh forecast if the Largent bill ever became law.
"If enacted, it would create enormous uncertainty which could well have a severe adverse impact on our economy, our workers, our businesses, our people," Rubin said Tuesday. "Families, for example, would not know what to pay for a house because they wouldn't know if their mortgage interest would be deductible."
House Minority Leader Dick Gephardt, D-Mo., said the Largent bill "is yet another irresponsible Republican idea masquerading as a solution."
The bill, endorsed by House and Senate leaders, is backed by the National Federation of Independent Business, which will present petitions with signatures from more than 750,000 small businesses to Congress Wednesday backing the plan.