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Tax-Writing Panels to Act in June

Monday, May 19, 1997

OnLine

The budget resolution that the House and Senate are expected to approve this week instructs the House Ways and Means Committee to mark up a tax bill by June 13 and the Senate Finance Committee to mark up a tax bill on or around June 27.

The tax bill will provide details on the net $85 billion tax cut assumed by the budget resolution, which was approved by the House Budget Committee May 16 and will be considered May 20 on the House floor. The Senate Budget Committee is expected to pass its version of the resolution late today, and the full Senate plans to approve the resolution later this week.

House Ways and Means Committee Chairman Bill Archer, R-Texas, expressed concern about whether the panel, when it marks up a bill, would be able to win support for a gross cut that is as large as the one called for in the budget agreement. The problem is that any cut above $85 billion must be offset by tax hikes and the panel probably would not sign on to any increases above $32 billion, which is the revenue raised by extending the airline ticket tax and other items, Archer said.

The Senate Finance Committee probably will be more ambitious in terms of the size of the gross tax cut and probably will approve a bill that comes closer to the $135 billion gross tax-cut cap contained in the budget agreement between the White House and Congress.

The date of the markup is significant in terms of the capital market provisions proposed by President Clinton. The following proposals are scheduled to go into effect when the Ways and Means Committee acts:

• Deny interest deduction on certain debt instruments.
• Defer deduction for accrued but unpaid interest on convertible debt.
• Treat certain preferred stock as "boot."
• Require gain recognition on certain distributions of controlled corporation stock.
• Reform the treatment of certain corporate stock transfers.
• Further restrict like-kind exchanges involving foreign personal property.