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Bush, McCain Spar Over Taxes

Locked in a tight presidential contest with Arizona Sen. John McCain among New Hampshire voters, George W. Bush pressed on with his criticism of McCain's tax plan, hoping it will put him ahead in public opinion polls.

McCain, who desperately needs a win in New Hampshire to survive, plans to hammer Bush on the issue of Internet taxes, campaign officials said. It's an issue McCain hopes will resonate with typically irascible, freedom-loving New Hampshire voters.

The McCain campaign said Tuesday it will challenge Bush to sign an Internet tax pledge. McCain campaign strategist Mike Murphy said the Arizona senator is going to challenge Bush to sign a pledge for a permanent ban on taxes on sales over the Internet.

Murphy said Tuesday that Bush has been unclear, doing a "Texas two-step on Internet taxes."

Bush was campaigning in New Hampshire Tuesday and part of Wednesday before returning to Iowa to campaign there exclusively until Monday's caucuses.

"There's about six polls out, most of 'em showing us close, but there's a lot of time, I've got a lot of work to do," Bush, the Texas governor, said Monday night upon arriving here after a one-day break from the campaign trail.

"I like my chances, I like my message. I like the idea of pointing out that his tax reform is going to raise taxes on people here in this state, and I intend to make that an issue," Bush said.

The two rivals for the Republican presidential nomination renewed at a distance the argument that began Saturday when Bush said in a debate that McCain's tax proposal would impose "a $40 billion tax increase" on certain employer-provided benefits.

The architect of McCain's plan said Monday that Bush was wrong.

Mark Spitzer, a Phoenix tax attorney, said McCain's proposal is to end the deductions employers can now take on tax-exempt benefits they give their workers.

"It does nothing to the employees," said Spitzer, an Arizona state senator.

McCain says Bush has mischaracterized his proposal.

"They're talking about income taxes," said McCain campaign spokesman Howard Opinsky. "We're talking about payroll taxes."

The Bush campaign based its assertion on Congressional Research Service estimates of the revenue loss due to the tax-free treatment of non-retirement fringe benefits aside from health insurance coverage and child care, which wouldn't be affected.

Bush's $40 billion claim reflects those estimates extended for five years after the next administration takes over. But the numbers are based on taxes paid by individuals, not their employers.

Bush advocates a five-year, $483 billion tax cut, and says the only way to be certain that projected budget surpluses aren't spent by Congress is to refund most of the money to taxpayers.

McCain's alternative is a $237 billion overall cut, the closing of what he calls tax loopholes to offset part of the cost, and the commitment of additional budget surpluses tsecure the financial future of Social Security.

Bush also was expected to be endorsed by former Virginia Gov. George Allen on Tuesday. Virginia's GOP primary is Feb. 29 and Bush already has been endorsed by Gov. Jim Gilmore and other state Republicans.

McCain, who is not actively campaigning in Iowa, planned to spend most of the week in New York and New England, attending fund-raisers and other campaign events.

The New Hampshire primaries are Feb. 1, eight days after the Jan. 24 Iowa caucuses. Polls show McCain in a statistical dead heat with Bush.

CBS Worldwide Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report

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