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George W.Bush seemed a little puzzled last week. Why was he having such a hard time convincingvoters that a simple, across-the-board tax cut was a good idea? Maybe because while the plan is simple, its implications are not. With jobs plentiful and wagesrising, many voters seem uncertain that they need such a windfall from Uncle Sam, given that there are other priorities such as paying down thefederal government's long-term deficit.

Unfortunately for voters, Gore's tax cut ideas are even harder to parse. Thecomplexity of the proposals provoked a propaganda shooting war between the Bush and Gore campaign headquarters, which issued competing examples ofwhat kind of family supposedly benefited most from each proposal. "In Gore'sview everybody has a kid in college and an ailing parent," jokes Robert McIntyre, director of Citizens for TaxJustice. "In Bush's view, nobody has."

Gore's proposals could reduce taxes by roughly billion over 10 years, compared with Bush's .6 trillion. But the Democratic program is less a tax cut than a laundry list of giveaways from the InternalRevenue Service that subsidize behavior Democrats like. Figuring out who benefits mostfrom each program is a complicated exercise. Even harder is figuring out what is best for the nation. Butone thing is clear. When it comes to taxes, voters this year have a choice between two sharply different political philosophies.

The core of the Bush program is an across-the-board tax-rate reduction (chart, Page 19) of the kind economists generally prefer for its simplicity.And the philosophy is simple too. "The surplus is not the government's money," says Bush."The surplus is the people's money." Bush says it should be returned to them so politicians won'tsquander it.

Hint of engineering. The Republicans do offer bits of social engineering. Married couples withtwo incomes would be able to deduct up to ,000, partly alleviating the higher tax take onmarried couples, compared with singles filing separate returns. Inheritance taxes--or death taxes as Republicans call them--would be phased out.Last week, Congress sent a bill to the White House that would accomplish this, although Clintonis expected to veto it.

Bush says his program offers significant tax relief to middle class and even poor families because they receive the biggestpercentage cut in taxes. But the claim opens Republicans to charges that they are only dressing up ahuge tax cut for the wealthy. Citizens for Tax Justice, for example, calculates that the highest 1 percent of income earners, with average incomes of ,000, wouldget an average tax cut of ,072, amounting to 42 percent of the entiretax benefit. Poor families, ones earning between ,600 and ,400, would get just on average. Of course, these disparitiesreflect the fact that rich people pay most taxes to begin with.

Figuring whobenefits from Gore's plan is even harder. "People in the same income bracket will pay very different taxes," says Robert Reischauer, president of the Urban Institute."You won't pay on your ability toearn but on your consumption pattern and the family demographics." A middle-income couple earning ,000 on two incomes, with high-school kids and a mortgage, for example, would be out of luck withGore. But if the kids were young enough for child care, or old enough for college tuition,the benefits would start rolling in. Most benefits are capped so the rich getcrumbs.

Yet benefits may be significant for those who get them. "If you want to be fiscally responsible, and limitthe amount you devote to tax cuts, you have to target it to purposesand people," says Alan Blinder, the Princeton University economist who advises Gore. For example, Gore would change the child- and dependent-care tax credit to allow families that pay no taxesto receive up to ,400 from the government, making it less of a tax cut than a direct subsidy. Themost expensive component of the program would be new tax-exempt "retirement savings- plus accounts," inwhich the government would match contributions, up to for every of contribution for low-income households.

The list goes on,all of which the Bush people say translates into complexity, distortion in how people spend money, paperworkand opportunities for tax fraud.

And that raises a more fundamentalquestion. Is cutting taxes the best way to spend the surplus? According to a study by economists William Gale of the Brookings Institution and Alan Auerbach ofthe University of California--Berkeley, much of the .5 trillion surplus projected bythe Congressional Budget Office is already committed to pay for Medicare and government pensions. Projections for most of the remaining surplus, while still large, depend on what may be an unrealistic assumption that government discretionary spending, including defense, will continue to decline as a proportion of theeconomy. They believe the actual 10-year surplus that is available for tax cutsor extra spending will be closer to billion.

On the other hand, not all economists see eliminating the national debt as a worthypolicy goal. John Makin, resident scholar at the American Enterprise Institute, for example, adheres to the "supply side" argumentthat tax cuts will build a bigger economy. "Lower,more- uniform marginal tax rates would increase the productive capacity of the economy, " he says. Makin figures thata trillion-dollar tax cut would cost the government only billion in net tax revenues over 10 years, while spurring .44 trillionin extra economic output.

Voters will have to decide whether either tax plan makes sense, or whether candidates areonly hawking a standard dose of election-year snake oil. In any case,the new president will find that the Congress has views of its own on taxes. Skeptical voters may find hope in the prospect of continued legislative gridlock.

The Bush Plan

The Bush tax plan calls for reducing the15 percent tax bracket to 10 percent and cutting the top rate from 39.6 percent to 33 percent. The plan also doublesthe child tax credit to ,000 for most filers and reduces the so-calledmarriage penalty. The chart below is taken from the Bush campaign's tax calculator posted on its Web site. The campaign says the calculator makes no estimates for filers earning more than ,000because the large number of deductions such filers usuallytake makes comparisons difficult. According to Citizens for Tax Justice, a liberal research group, filers earning between ,000- ,000 would save anaverage ,253 under the plan, and those earning over ,000 would save an average ,072.

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