Jack Kemp is positioning himself to run for the Presidency in 1988 as the candidate of the entrepreneur. He has adopted the language of economic growth and has embraced the spirit of entrepreneurial populism. But what has he actually done in Congress about the issues that affect growing companies?
PERSONAL INCOME TAXES
What he says: Marginal tax rates -- the taxes paid on the last dollar earned -- have been the focus of Kemp's most passionate oratory since he became a student of supply-side economics in the mid-1970s. Kemp believes that marginal rates are the key to personal incentives in a free-market economy, and he advocates sharp rate reductions across the board.
What he's done: Kemp-Roth, the tax-cut bill President Reagan embraced in 1981 that cut income taxes 25% over three years, was the largest personal income-tax reduction enacted by Congress since 1962.Kemp's current tax-simplification proposal, known as Kemp-Kasten, would cut the top marginal rate from 50% to 24% while eliminating most deductions. Compared with its Democratic counterpart, Bradley-Gephardt, however, the Kemp bill has only a handful of co-sponsors in Congress. Kemp opposes the 35% top personal rate in President Reagan's tax-reform plan, and he hasn't made it clear whether he would support the President's package if that rate is not brought down.
What he says: Again, Kemp focuses on marginal rates, which he wants to see sharply reduced from 46% to 35%. He says also that the country's complex system of industry-specific tax breaks favors capital-intensive companies and skews investment decisions.
What he's done: Kemp-Kasten would substantially reduce marginal rates to 35% while wiping out a vast array of business tax credits and deductions, including the research and development tax credit and the investment tax credit. One break it leaves alone is the deduction for intangible drilling costs for oil and gas producers; they saved their loophole by hiring a close Kemp adviser, Jude Wanniski, as a lobbyist. Kemp's bill provides for lower rates (15% to 25%) on the first $100,000 earned by businesses.
What he says: Kemp declared recently that he would like to see the tax on capital gains eliminated.
What he's done: When the Kemp-Kasten package was unveiled, venture capitalists were up in arms because the bill actually raised the effective capital gains rate from 20% to 25%, although it did allow for inflation indexing. After a trip to Silicon Valley and pressure from venture lobbyists, Kemp changed his proposed effective rate to 17.3%, and he helped persuade the Reagan Administration to do the same in its "Treasury II" proposal.
What he says: Kemp advocates the establishment of "enterprise zones" -- designated inner-city areas where taxes would be reduced or forgiven and regulations eased. He also supports urban homesteading. Kemp talks frequently to such groups as the Urban League, and he thinks his urban platform is an important part of his political identity.
What he's done: Back in 1981, enterprise zones legislation looked promising, in part because it was co-sponsored by Democratic Rep. Robert Garcia of the South Bronx. The bill twice passed in the House but never made it through the Senate.This session, Garcia delayed his support of the legislation for the same reason that most Democrats oppose enterprise zones: fear that Republicans will use them as an excuse to dismantle more traditional federal programs that support cities.
What he says: "I do not worship at the altar of the balanced budget," is one of Kemp's favorite lines on the political stump. Supply-siders believe that with proper tax and monetary policies, the country can grow out of its deficits.
What he's done: Kemp does not support a balanced-budget amendment. Although he works hard to channel federal money to his home district, he has voted with his party on budget bills throughout his career.
What he says: Kemp is a leading conservative Fed basher, and admits that he sometimes gets in trouble "because I dare to criticize Chairman Paul." For a long time, Kemp relentlessly advocated a return to the gold standard, but he has recently begun to moderate that stance. He continues to call for a Bretton Woods-style international monetary conference to begin to fix exchange rates.
What he's done: Kemp has three bills on the Federal Reserve pending, none of which has much chance of passing, at least this year. One is a "Sunshine" bill that would force the Fed to disclose policy decisions more quickly. Another would force the Fed to target money growth to a price rule, rather than by the current quantity rule -- the price could be either gold or a "basket" of commodities including gold. A third bill would cause the adoption of a modernized gold standard by the United States.
What he says: Kemp maintains that his "conservative populism" isn't antibig business, but he nonetheless makes a lot of noise about the purity of his freemarket ideology, and the egregiousness of federal subsidies to large corporations.
What he's done: Kemp voted against the Chrysler Corp. bailout and opposes Synthetic Fuels Corp. and the Export-Import Bank. However, Kemp opposes a minimum corporate tax, even though he decries provisions in the tax code that allow large, profitable companies to avoid any tax liability.
What he says: "Noninflationary economic growth" is the rallying cry of supply-siders like Kemp. Unlike most economists, Kemp believes that low tax rates and easy credit will not necessarily lead to double-digit inflation.
What he's done: Kemp and other supply-siders have had it both ways on the inflation issue. On the one hand, they take credit for the lower inflation under the Reagan Administration. On the other, they have consistently criticized the Fed for tightening credit. Clearly, Kemp considers low interest rates to be more important than low inflation, although he rejects the idea that there must be a tradeoff between the two.