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Archer Revises Plan To Provide More Estate Tax Relief, Scales Back Corporate AMT Relief

Thursday, June 12, 1997

Deloitte & Touche OnLine

House Ways and Means Committee Chairman Bill Archer, R-Texas, June 11 revised his tax plan to further expand the estate tax relief, change the phase-in of corporate alternative minimum tax relief, and make other changes.

Archer did not make changes to his child credit as suggested by GOP congressional leaders, who wanted to accelerate the phase-in of the credit.

GOP congressional leaders and the National Federation of Independent Business expressed concern about Archer’s original estate tax relief proposal, which they say did not go far enough.

To offset the additional revenue loss from expanding the estate tax, Archer was pressured to eliminate his proposal to eliminate the corporate alternative minimum tax.

The estate tax unified credit would be increased from $600,000 to $1 million and be fully phased in by 2007, instead of going into effect in 2014 as under Archer’s original proposal, according to a Joint Committee on Taxation staff description of Archer’s revision.

The AMT for small corporations would be repealed December 31, 1997, and for large corporations it would be repealed December 31, 2006, the description said.

Archer’s corporate AMT proposal is vulnerable because GOP leaders do not believe they will gain politically by backing large business interests that want to return to the days when they paid no or only small amounts of federal taxes, which the AMT was designed to prevent.

The GOP’s decision to support small businesses to a larger degree than they support large corporations illustrates the significant power and influence that the small-business lobby has in Washington.

The extension of the airline ticket tax also would be altered by the substitute so that taxation of the domestic portion of international flights is not changed. The new version will "give some relief" to the airlines, Archer told CongressDaily news service.

Archer did not respond to criticisms from the White House and congressional Democrats, who have expressed concern about the distributional impact of his proposal, particularly regarding the child credit.

By not responding to Democratic charges about how the benefits of the bill will be distributed among different income groups, the GOP may be opening themselves to attacks from the left, which will try paint Republicans as the party of the rich.

Democrats To Offer Substitute: A draft version of the Democratic substitute to be offered by Rep.Charles Rangel, D-N.Y., who is the committee’s ranking Democrat, includes greater emphasis on providing tax incentives for education and children.