Archer Asks for Study
on 'Hidden' Taxes

Monday, December 1, 1997

OnLine

Congressional staff have been asked by House Ways and Means Committee Chairman Bill Archer, R-Texas, to study income tax rules that cause effective marginal tax rates to differ from one taxpayer to another.

"While the (Internal Revenue) Code contains five different statutory marginal tax brackets (15%, 28%, 31%, 36% and 39.6%), the Congress's creation of phaseouts and limitations has created numerous situations where the effective marginal tax rate on a taxpayer's additional earnings differs from one of those statutory rates," said the letter to Joint Committee on Taxation Chief of Staff Ken Kies requesting the study.

"I suspect that too many lawmakers and taxpayers are unaware of these 'hidden' effective marginal tax rates," Archer told Kies. The study should examine the magnitude of the deviation from the statutory rates and estimate the number of taxpayers affected.

The limit on itemized deductions and the phaseout of personal exemptions increase the effective tax rates of some taxpayers, Archer said. That limit and the phaseout were added in order to maintain the progressivity of the current tax code.

Congressional staff also should examine the so-called marriage penalty, which causes some married couples to pay higher taxes than similarly situated single taxpayers, according to the letter.

GOP lawmakers have been discussing various tax-cut proposals that could be used to give the anticipated budget surplus back to taxpayers. Discussions had focused on ways to eliminate the marriage penalty, but Archer now is adding to the list the elimination of the phaseout of the personal exemption and the limit on itemized deductions.

Field Hearing On IRS Planned: The Senate Finance Committee announced that its Taxation and IRS Oversight panel will hold a field hearing Dec. 3 on ways to improve the Internal Revenue Service. The hearing will be held in Oklahoma City and will be chaired by Sen. Don Nickles, R-Okla.

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