WASHINGTON -- As they attempt to forge the much-anticipated tax-cut bill, negotiators for the Clinton White House and the Republican-led Congress are deeply divided over what new benefits, if any, should go to the working poor.
Each side frames the issue differently. Republicans insist that the heavily burdened middle class, which they say hasn't had a tax break in 16 years, should have first claim on family tax cuts -- not workers so poor they hardly pay any taxes at all.
The White House, in response, argues that it is unfair for a family with four children making $80,000 a year to get a $2,000 credit while a family with four children living on $18,000 a year gets nothing at all.
The rhetorical flourishes on both sides far exceed the actual differences between the proposals. But the political symbolism of appearing to help the rich at the expense of the poor may be powerful enough, some Republicans say, to push the GOP President Clinton's way.
Republicans argue that low-income working families -- making roughly $12,000 to $30,000 a year -- already benefit from the Earned Income Tax Credit program, which for some means a refund check bigger than what they paid in taxes.
"Any expansion of that would be welfare, and people already being stretched to the limit should not be asked to pay for that," said Rep. John A. Boehner, an Ohio Republican in charge of crafting the party message.
But Clinton and his Democratic allies in Congress are confident that they can make a more persuasive case: that no working American, particularly parents struggling at the low end of the income scale, should be left out of the tax bill's long-awaited largess.
"We are happy to have a national debate about whether a $23,000-a-year police officer -- or teacher or secretary -- with kids should get tax relief," said Gene Sperling, a top White House economic adviser. "If the Republicans want to say that is welfare, we are happy to take that to the country."
Erosion of the GOP position is already apparent in the Senate.
Limited concessions to low-income families were included in the tax bill approved by the Senate last month.
Sen. Pete V. Domenici, the New Mexico Republican who heads the Budget Committee, joined Democrats at that time in an unsuccessful attempt to win further concessions for poorer taxpayers. He predicted his GOP colleagues would ultimately compromise on the issue.
"There is some logic" to the argument that only those who pay income tax should get a tax break, Domenici said. "But as far as New Mexico is concerned, a tax-cut bill that doesn't help the working poor isn't worth very much."
Debate over family tax breaks is taking place in the context of shaping a total tax cut bill worth $135 billion over five years, and $341 billion over 10 years. The bill also includes as major elements cuts in the capital gains and estate taxes.
But the features probably offering the greatest assistance to families are a proposed $500-per-child credit and a package of breaks intended to help students attend college or acquire other training after high school.
Many Republicans -- particularly the social conservatives -- would be happy to extend the family credits as far and wide as possible. But those credits are very expensive, and total tax cuts were limited to $135 billion in the balanced-budget agreement Congress struck with Clinton in May.
The Clinton and House versions of the tax-cut proposals devote about half the total tax cuts -- or $70 billion over five years -- to the child-tax credit. The Senate child-tax credit proposal would cost more than $83 billion.
Each package is structured differently, though, in terms of the ages of children covered, the income of families who are eligible and the dates that the credits take effect.
Both the House and Senate bills extend the upper income limit to couples earning $110,000 a year. Clinton's proposal would stop the family credits at couples earning $75,000 annually for the first two years, and raise the ceiling to $100,000 after that. But he fully covers those at the low end of the scale.
"As a practical matter, the difference between the president's proposal and Congress on child credits amounts to splitting hairs," said Robert D. Reischauer, a former director of the Congressional Budget Office. "Looked at from 100 yards away, they are hardly visible, except that they have a tremendous amount of symbolic significance."
A key question is how to treat low-income families who now get most or all of their federal tax debt wiped out by the Earned Income Tax Credit.
That credit was established in 1975 to help low-income people shoulder the burden not only of income taxes, but also of the so-called "payroll" taxes that finance Social Security and Medicare.
For families earning less than $18,000 a year, the earned-income credit exceeds their total federal taxes. They get a check from the Treasury Department for the additional amount.
