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Daschle Unveils Democratic Substitute

Wednesday, June 25, 1997

Senate Minority Leader Tom Daschle, D-S.D., unveiled the Senate Democratic alternative to the fiscal 1998 tax bill that he will offer on the Senate floor late June 25 or June 26.

The Democratic alternative eliminates several items in the Senate Finance Committee bill, which critics charge would explode the proposal’s costs after the first five years. Daschle’s plan would eliminate indexing of capital gains, proposals for so-called "backloaded" individual retirement accounts, and "phased-in and indexed estate tax cuts," according to a description of the amendment obtained by Deloitte & Touche LLP. Estate tax cuts under the proposal are limited strictly to family businesses and farms.

The "family" capital gains proposal under the Daschle plan would provide a phased-in, 30% exclusion against ordinary income tax rates for assets held three years or longer. Starting in 2003, the first $500 of dividends a family earns per year also would be eligible for the exclusion. The current 50% exclusion for small business corporate stock would be enhanced by increasing the size of eligible corporations, easing capital and stock redemption rules, and including certain partnerships, S corporations, and sole proprietorships under the eligibility rules.

Daschle’s plan also would substantially modify the child tax credit to address many of the Clinton administration’s concerns about "fairness," to ensure that all families fully benefit from the credit.

The Senate began debate on the tax bill June 25 and is expected to continue discussing the bill through the evening. No votes on amendments will take place before June 26, Senate Finance Committee Chairman William Roth, R-Del., told the Senate.

A vote on the amendment, which probably will fail and a vote on the bill itself are not expected until late on June 26 or early June 27.

The amendment could give clues about the position the White House will take when House and Senate leaders meet in July to work out the differences between their bills.