Tax Reduction

CAMBRIDGE - Gov. Robert L. Ehrlich Jr. said yesterday he will seek to shave more than a penny from the state's property tax rate but will be careful in the coming legislative session about spending the current budget surplus in light of projected deficits in future years. Ehrlich told business leaders at the Maryland Chamber of Commerce's annual convention here that the surplus - which he estimated at "almost $2 billion" - was generated as much by the national economy as by his administration's management.

Hundreds of Howard County's retirees are virtually certain to benefit from competing but nearly identical tax reduction plans announced yesterday by rival County Council members. One day before the filing deadline for bills to be introduced next month, Ellicott City Republican Christopher J. Merdon and Guy Guzzone, a North Laurel-Savage Democrat, revealed their tax reform plans. Both men are expected to run for county executive next year. Merdon and Guzzone each proposed a bill that would defer future property tax increases - interest-free - for people 65 or older or totally disabled who have household incomes below about $75,000.

WASHINGTON - President Ronald Reagan inherited a bad economy in the 1980s and made it better. That legacy endeared him to many Americans, but what he did and how he did it remain highly controversial two decades later. In slashing tax rates, building up the Pentagon budget and pushing deregulation, Reagan put his country and his party on a new economic path. And now, in a new century, the same battles over his economic philosophy are being fought again. The Republican Party has embraced the Reagan tax-cutting message as party dogma, emphasizing a lighter tax burden over reducing deficits.

WASHINGTON - President Bush signed a $350 billion tax-cut and state-aid package yesterday, clinching with a flourish of his pen a hard-fought achievement that he says is crucial to restoring the nation's economic health. The enactment of the measure - Bush's third round of tax cuts in as many years - puts in place a key element of his re-election strategy: convincing voters that he cares about, and is working to ease, their economic struggles. Bush celebrated the feat in a ceremony in the ornate White House East Room yesterday.

WASHINGTON - House and Senate Republican leaders struck a deal yesterday on a $350 billion measure that would reduce taxes on dividends and capital gains through 2008. The deal was reached as lawmakers raced to complete the tax-cut measure before leaving tomorrow for a weeklong break. "We have an arrangement," said Senate Majority Leader Bill Frist, a Tennessee Republican. "We do have 50 votes" in support of the package. The House could pass the measure as early as today, and the Senate will likely follow suit tomorrow, sending it to President Bush.

Trimming taxes of the rich won't revive economy President Bush seeks to cut taxes for those rich enough to sit home and collect stock dividends but offers little to those who have to get up and go to work each day ("Bush offers bold tax cuts," Jan. 8). And the boost this proposal gives the stock market will be short-lived. Companies will quickly change their traditional taxable $3 dividend to a tax-free $2 dividend, keeping their offerings competitive with the bond and interest markets.

WASHINGTON -- President Bush committed another linguistic slip in California the other day when, responding to Senate Majority Leader Tom Daschle's charge that his $1.35 trillion tax cut probably worsened the recession, he declared that "not over my dead body will they raise your taxes." Obviously, he didn't mean to put that "not" in there. In any event, his meaning was clear, as was his implication that Mr. Daschle was calling for a rollback of Mr. Bush's huge tax cut over 10 years, which the Senate Democratic leader had not done.

WASHINGTON - Hoping to jolt the slumping economy, Republican senatorial leaders signaled a willingness yesterday to go along with a cut in payroll taxes that could be paired with a reduction in the tax rate on capital gains. The GOP leaders hoped the trade-off would be attractive to Democrats, who complain that capital gains cuts benefit the wealthy. Many Democrats favor a reduction in payroll taxes, which impose a disproportionately heavy burden on lower-income workers. The possible bargain emerged as the Bush White House, and Republican and Democratic congressional leaders, struggled to shore up their political positions in the face of increasingly gloomy news of shrinking profits and rising layoffs.

THERE ARE, on the surface, some appealing aspects of the president's $1.35 trillion tax-cut bill: Everyone who pays taxes gets cash back -- as much as $600. You'll be able to put more money aside for retirement in 401(k) and IRA plans. Your payroll withholding will gradually shrink. You'll be able to deduct up to $4,000 a year for college tuition. Child-care and adoption tax credits are rising. No one can complain about these provisions, or many others that reduce the tax burden. But the magnitude of the president's proposal could have far-reaching negative implications.

WASHINGTON - Demanding quick action to revive the nation's "faltering" economy, President Bush urged Congress last night to approve his proposed $1.6 trillion tax cut. In a prime-time address that marked his first appearance before a joint session of Congress, Bush challenged members of both parties to "join me and stand firmly on the side of the people" by enacting the largest tax reduction in two decades. "Taxes are too high and government is charging more than it needs," he said. "The people of America have been overcharged, and on their behalf, I'm here asking for a refund."