Copyright 2000 Gannett Company, Inc.
USA TODAY
July 12, 2000, Wednesday, FINAL EDITION
SECTION: NEWS; Pg. 7A
LENGTH: 790 words
HEADLINE:
GOP maintains tax-cut pressure Veto-threatened bills have broad support
BYLINE: William M. Welch
DATELINE: WASHINGTON
BODY:
WASHINGTON -- Congressional Republicans plan to crank up the pressure
on
President Clinton and the Democrats this week by following
through on
proposals that would eliminate taxes on large estates
and cut income taxes.
Clinton has threatened to veto both bills, which are awaiting
Senate votes. However, versions already have passed the House
of
Representatives with significant support from Democrats. And
at a time of
growing federal budget surpluses, the lure of election-year
tax cuts is
proving strong.
Whether taxpayers actually will see any relief from
either proposal
this year probably will come down to the willingness of both
parties
and the president to strike a grand deal before the elections
this fall.
Clinton has offered to trade tax cuts for his
priority, a new
Medicare drug benefit for senior citizens, but Republicans
have
rejected that so far.
New forecasts of $ 1.9 trillion in
federal surpluses over the next
decade, excluding Social Security, have
triggered a fierce debate
over what to do with the expected windfall.
"I think it was easier when we had a deficit," says Sen. John
Breaux of Louisiana, a conservative Democrat who is sympathetic
to tax
cuts but says both sides must quit jousting and come to
a deal if anything
is to happen this year.
The proposal to eliminate federal
inheritance taxes, which Republicans
have labeled the "death tax," has
proven surprisingly popular
in Congress and with the public. It has gained
more support than
even its leading lobbyists had expected.
"If
somebody had said two years ago that the federal estate tax
can be repealed,
I would have said this is a figment of somebody's
imagination," says Mark
Bloomfield, president of the American
Council for Capital Formation, a
business group that lobbies on
taxes. "It's ironic, because so few estates
pay the tax. But
it has a lot of political oomph behind it."
Eliminating the estate tax has scored high in public opinion polls,
a yardstick that both parties watch carefully. The issue is also
a
favorite cause of wealthy campaign contributors. The proposal
passed the
House last month on a 279-136 vote. That margin is
wide enough to override a
presidential veto, should it come to
that. Sixty-five Democrats joined
Republicans in supporting repeal.
Backers say the estate tax
penalizes families that hope to pass
along a small business to the next
generation and its premise,
taxing the product of a lifetime, is unfair.
Opponents say repeal
would be a giveaway to the wealthy, because only
estates worth
more than $ 675,000 -- about 2% of all estates -- face any tax
now, and that exemption is scheduled to rise to$ 1 million by 2006.
"The liquidation of productive assets to finance tax liabilities
is anti-family, anti-worker and anti-business," says Sen. Don
Nickles,
R-Okla., the assistant majority leader. "That's wrong."
Clinton said
this week that he wants to provide estate-tax relief
but that outright
elimination would be an expensive giveaway to
the rich. Treasury Secretary
Lawrence Summers puts the political
choice clearly: "The phased-in cost of
estate-tax repeal is enough
to provide a much-needed
Medicare prescription drug benefit."
The GOP proposal would
eliminate estate taxes over 10 years, at
a cost to the government of $ 105
billion over that period. The
administration says that cost would mushroom
to $ 750 billion over
the following 10 years. An alternative offered by
Senate Democrats
would cost roughly half those amounts, $ 64 billion over
the next
decade and $ 300 billion the following 10 years.
Support for estate-tax repeal has overshadowed the
GOP's other
tax-cut plan, which party leaders initially envisioned as having
broader public appeal. It is billed as erasing the "marriage
penalty," a
quirk in tax laws that causes some couples to pay
more than if they were
single. However, the proposal would go
further. It would cut taxes for
millions of families by raising
the income levels for the 15% and 28% tax
brackets. That would
allow an estimated 21 million families to pay taxes at
lower rates.
The Senate proposal has a larger scope than a similar
plan the
House approved in February on a 268-158 vote. The Senate bill
would amount to $ 236 billion in tax reductions over the next decade,
compared with $ 173 billion in the House bill.
Democrats are
demanding the chance to offer alternatives and other
amendments, and they
can throw procedural roadblocks in the path
of estate-tax
repeal. However, the marriage-penalty bill is covered
by special
budget rules that don't allow a filibuster. Democrats
expect it to pass the
Senate and face a presidential veto.
GRAPHIC: PHOTO, b/w, Dennis Cook, AP;
PHOTO, b/w, AP; Summers: Prefers Medicare prescription benefit to estate-tax
cut. Nickles: Estate tax is "anti-family."
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