Congress Debates Marriage Tax Cut

Thursday, July 20th 2000, 12:00 am

By: News On 6

WASHINGTON (AP) â€” Upping the ante in their tax cut confrontation with President Clinton, congressional Republicans have agreed to send him a less costly version of their bill to eliminate the marriage penalty tax in hopes of making a threatened veto more difficult.

``I want to get something on his desk that's signable,'' said House Speaker Dennis Hastert, R-Ill., said Wednesday.

Under the agreement, which the House and Senate were aiming to pass Thursday, millions of married couples would get some tax relief this calendar year, but their total tax cut would be lower than the amounts in earlier GOP bills.

The bill's total revenue cost was estimated at $89.8 billion over five years. That compares with a 10-year, $248 billion version passed Tuesday by the Senate, and the House's competing bill costing $182 billion over 10 years. A 10-year estimate for the compromise was not available, but the agreement is closer to the House version.

``This agreement means that we will give President Clinton every reason to sign the bill into law and help end the marriage penalty,'' said Rep. Bill Archer, R-Texas, chairman of the House Ways and Means Committee.

If the compromise passes both houses of Congress this week, the president would be forced to decide whether to sign or veto the bill before the end of the Republican National Convention, which starts July 31. Clinton had made his approval conditional upon Congress passing an acceptable prescription drug benefit plan for Medicare.

Vice President Al Gore, in Iowa on Wednesday campaigning for president, said he remained opposed to the Republican measure, in part because it is ``very, very expensive'' and could benefit people who don't need it.

Elimination of the tax code's marriage penalty, in which an estimated 25 million couples pay more than they would if single, is the centerpiece of the GOP's election-year tax cut agenda. The Republicans' decision to send Clinton a less costly bill comes as the White House has stepped up criticism that huge GOP tax cuts could rapidly deplete the forecast budget surplus even as government revenue projections rise.

The White House chief of staff, John Podesta, said in a letter Wednesday to Senate Majority Leader Trent Lott, R-Miss., that an estimated $700 billion in GOP tax cuts and spending bills that exceed Clinton's request represent a ``huge spending binge'' in an election year.

``Now is not the time to abandon responsible budgeting by spending money before it even comes in the door,'' Podesta said. ``We can cut taxes for the middle class, while maintaining fiscal discipline and making critical investments in our future.''

The agreement gradually would enlarge the bottom 15 percent income tax bracket for all married couples so that it is equal to that of 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 Senate-passed enlargement of the next-highest 28 percent tax bracket was dropped, partly to reduce White House claims that the bill is skewed toward higher-income couples.

That change would be effective on Oct. 1 of this year â€” the beginning of the federal fiscal year â€” much more quickly than in either of the previous versions and a month before the election.

Another change taking effect Oct. 1 would be adjustment of the standard income tax deduction for married couples so that it is equal to that of two single people. This year, that would increase a married couple's deduction from $7,350 to $8,800.

The agreement would also lift the income cap by $2,000 for lower-income couples who claim the earned income tax credit, and 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.

Because the bill is governed by five-year budget rules, all of the changes would phase out on Dec. 31, 2004. That means a future Congress would have to make the tax cut permanent, or married couples would get hit with a tax increase in 2005.

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On the Net: A text of the bill, H.R. 4810, may be found at http://thomas.loc.gov