GOP proposes $80 billion tax cut Plan would reduce penalty on couples filing jointly

September 13, 1998|By NEW YORK TIMES NEWS SERVICE

WASHINGTON -- Republicans unveiled the details of their proposed tax cuts yesterday, laying out a package that they hope will overcome Democratic opposition by appealing to many married couples as well as to politically potent interest groups such as farmers and small-business owners.

The cuts would be worth about $80 billion over five years, far less than some conservatives had been pressing for earlier this year but enough that paying for them would require dipping into projected federal budget surpluses.

The White House has said it will oppose any tax cut that relies on the surplus, which President Clinton wants to set aside until Congress and the administration settle on a plan to shore up the Social Security system.

In his weekly radio address yesterday, Clinton said Washington should work in a bipartisan fashion to maintain "fiscal discipline, setting aside the surplus -- every penny of it -- until we save Social Security first."

The Republican plan seems likely to pass the House before Congress adjourns early next month, but its fate in the Senate remains uncertain. Republicans said Clinton's fight for political survival could make it harder for him to suggest that Republicans are putting tax cuts ahead of Social Security's future.

The plan was drafted by Republican Rep. Bill Archer of Texas, chairman of the Ways and Means Committee. In announcing the plan, Archer said yesterday that it would preserve 90 percent of the projected $1.6 trillion surplus over the next decade and return the rest to taxpayers before politicians could spend it.

The centerpiece of the plan is a reduction in the so-called marriage penalty, which causes many two-income couples to pay a bigger tax bill than they would if single. The penalty mostly affects couples whose incomes are similar, but the solution being offered by Archer would benefit all couples who file jointly and claim the standard deduction.

The Ways and Means Committee estimated that the change would reduce the tax bill for married couples by an average of $243 per return. The change in the deduction would cost the government slightly less than $40 billion over the next five years, the committee said.

The Republican plan's other major provision would create an DTC exclusion for interest and dividend income -- $400 for couples filing jointly and $200 for individual filers.

Pub Date: 9/13/98

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