|  Home   |  Site Search   |  Tax News & Views  |

Archer Unveils Tax-Cut Proposal

Monday, June 9, 1997

Deloitte & Touche OnLine

A proposal cutting taxes a net of $85 billion, providing capital gains tax and alternative minimum tax relief, simplifying the tax code, extending various expiring provisions, and repealing various tax benefits was unveiled by House Ways and Means Committee Chairman Bill Archer, R-Texas, June 9.

"My proposal represents a simple vision. I believe Washington needs to tax less so the American people can do more," Archer said. "It will cover the American people from the childhood years to the education years, from the saving years to the retirement years. It will even cover people upon death," Archer said.

The Ways and Means Committee will act on the proposal June 11 and will have until June 14 to report its recommended changes. The Senate Finance Committee then will meet during the week of June 16 to craft its version of the package and must report its recommendations by June 20.

The House and Senate must then meet in conference to work out the differences on the two versions. Congressional leaders hope to have a version of the bill that they can vote on -- on both the House and Senate floor -- when they return from the July 4 recess. Staffs of the two panels will try to work out as many of the details prior to conference to avoid a protracted debate.

Generally, Archer did not adopt any one particular effective date for the revenue raising or losing proposals in his plan but instead used a variety of effective dates for specific proposals.

Archer is expected to be open to the possibility of offering changes to his proposal when the committee meets on June 11. Archer’s openness to an amendment could give interested parties a final opportunity to influence the process before the panel meets.

The proposal does the following:

• Cuts the capital gains tax to 10% for individuals in the 15% bracket, and to 20% for individuals in the 28% bracket.
• Sets the corporate capital gains rate at 30% for assets held more than five years.
• Capital basis will be indexed for individuals after 2000.
• Depreciation recapture for real estate capped at 26%.
• Extends the research and development tax credit, the section 127 education exclusion, the work opportunity tax credit, the deduction for contributions of stock to private foundations, and the orphan drug credit.
• Increases the unified estate tax credit to $1 million.
• Revises the President’s education tax proposals.
• Establishes a $500 per child tax credit.
• Extends and reforms the airline excise tax.
• Eliminates capital gains avoidance techniques, such as short-against-the-box.
• Modifies rules relating to corporate spin-offs.
• Requires registration of corporate tax shelters.
• Reduces the ethanol tax credit.
• Modifies corporate net operating loss carrybacks and carryforwards.
• Requires reporting of payments to attorneys.
• Limits tax benefits from corporate-owned life insurance.