Senate Passes Tax Cut for Couples

Friday, July 21st 2000, 12:00 am
By: News On 6

WASHINGTON (AP) — A Republican election-year tax cut for millions of married couples won final Senate approval Friday, sending the bill to the White House, where it faces a threatened veto by President Clinton.

Prior to the 60-34 vote, GOP sponsors sought to portray their confrontation over the ``marriage penalty'' bill with Clinton as a choice between more government spending and a return of growing tax overpayments to taxpayers.

``The issue is whether he will or won't grant America's families the tax relief they deserve,'' said Sen. William Roth, R-Del., chairman of the Senate Finance Committee. ``Let's divorce the marriage penalty from the tax code once and for all.''

Seven Democrats joined all but one Republican in voting for the bill, which passed the House on Thursday. Neither margin was sufficient to override a veto, meaning the issue will likely be a centerpiece of this year's election campaign debate over how to use the projected budget surplus.

``Once again, our Republican friends are using an attractive label like the marriage penalty as a cover for unjustified tax breaks for the wealthy, and at the expense of urgently needed priorities like prescription drug coverage for our senior citizens,'' said Sen. Edward M. Kennedy, D-Mass.

The measure would cut taxes for about virtually all married couples, beginning this year, at a cost of $292 billion over 10 years — still pennies on the dollar of a budget surplus projected at $2.17 trillion over the next decade.

Republicans said the bill was a long-overdue remedy to a tax law disparity that forces about 25 million two-income married couples, mainly those with two roughly equal incomes, to pay more taxes than if they were single.

``There's no reason on earth why the president should veto this bill,'' said House Speaker Dennis Hastert, R-Ill. ``I find it fiscally responsible to let hard-working folks keep more of their own money.''

Clinton has proposed more limited marriage penalty relief but offered to sign an earlier version of the GOP bill if Congress also passed an acceptable prescription drug benefit for Medicare recipients. But Republicans have refused that deal.

The marriage legislation was part of last year's $792 billion tax cut that Clinton vetoed. Republicans are pushing through Congress separate pieces of the larger bill in an effort to draw clearer, election-year contrasts with Democrats on specific tax issues.

Republicans are rushing to get the marriage penalty bill to the White House so that Clinton must decide whether to sign or veto it before the end of the Republican National Convention that takes place July 31-Aug. 3 in Philadelphia.

Treasury Secretary Lawrence Summers reaffirmed the veto threat in a letter Thursday to congressional leaders. He said the marriage bill's price tag would consume surplus money that could be used for other priorities.

Summers said more of the tax cut would go to the 1 percent of Americans with the highest incomes than the lowest 80 percent and that half the money would go to couples who get a marriage tax ``bonus'' because one spouse is the main earner.

``The package of bills working their way through Congress would subvert the fiscal discipline that has helped to fuel the economic growth of the past eight years,'' Summers said. ``This is not the time to abandon our path of fiscal discipline.''

The bill, a compromise negotiated by House and Senate GOP leaders, would give some tax relief in calendar 2000 to millions of married taxpayers.

Beginning this year, the bill would increase gradually the amount of married couples' income in the bottom 15 percent tax bracket until couples were taxed the same as two single people. Under current law, two single people pay the lower 15 percent rate on a greater share of their income than a married couple.

The bill also would adjust the standard income tax deduction for married couples so that it is equal to that of two single people, beginning with the 2000 tax year. That would increase a married couple's deduction from $7,350 to $8,800.

The agreement would raise by $2,000 the income cap for lower-income couples who claim the earned income tax credit. It also would ensure through 2004 that married couples could claim personal tax credits, such as the $500-per-child credit, without getting entangled in the complex alternative minimum tax.

The bill's cost over five years was estimated at $89.8 billion because budget rules limit it to that span, which means another Congress would have to extend the tax cuts. Without that sunset, the five-year cost was tabbed at $110 million.

If extended for an additional five years, however, the Joint Committee on Taxation projected that the compromise would cost as much as $292 billion, even more than the 10-year, $248 billion version the Senate passed earlier this week.


The bill is H.R. 4810.

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