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News & Views |Tax Week in ReviewMonday, January 10, 2000 Deloitte & Touche OnLine This Week's Headlines:
House GOP To Start Year With Votes on Three Small Tax Cuts--Rather than proposing one large tax cut as they did in 1999, House Republicans said January 6 the House will vote early in the second session on three smaller tax cuts: marriage penalty relief, expansion of tax-favored educational savings accounts, and tax incentives for economically distressed areas. Eliminating the tax penalty some married taxpayers face "will be the first major vote of the session," Speaker of the House Dennis Hastert, R-Ill., told reporters late last week. House GOP leaders would not say whether early votes on these three tax issues signal an abandonment of the strategy of sending the President one large tax cut bill later in the year in favor of a piecemeal approach. "Overpromising and underproducing is not effective. Instead it is better to underpromise and overproduce," House Majority Whip Tom DeLay, R-Texas, told reporters. Hastert made clear that the House Ways and Means Committee will be responsible for the content of the three provisions, which Republican aides said together would total about $120 billion in tax cuts over 10 years. Of the three proposals, marriage penalty relief by far is the most popular in both chambers and in both parties. The economic revitalization provisions contained in last year’s vetoed tax bill (including zero capital gains on certain investments in economically distressed areas) also enjoyed widespread support. The proposed expansion of educational savings accounts to private primary and secondary schools is much more controversial. The Clinton Administration and other Democrats contend the proposal would divert sorely needed funding away from public schools. Senate Wildcard Still unclear is how the Senate will respond to the House’s proposed strategy. Budget rules requiring tax cuts to be offset with revenue increases and a procedural system that gives senators much greater ability to amend legislation both pose significant obstacles to Senate passage of a series of tax cut bills. Senators also may not want to engage in another controversial debate over issues such as educational savings accounts that will not benefit them politically. White House Chief of Staff John Podesta deemed the GOP package "more consistent" with the President’s view of taxes, but added, "I think we need to see the whole plan and hopefully we can find some consensus."
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Bradley Proposes Attack on Corporate Tax Shelters--Democratic presidential candidate Bill Bradley January 4 introduced a proposal to raise taxes by $125 billion over 10 years by shutting down corporate tax shelters and eliminating "corporate loopholes." Bradley proposes to generate $100 billion over 10 years by:
Bradley’s proposal, and his revenue estimate, appear to be essentially the same as the Clinton Administration’s proposal in this area. Bradley’s plan aims to generate an additional $24 billion over 10 years by:
Clinton 2001 Budget To Feature Tax Retreads--President Clinton’s FY2001 budget will generally mirror the 10-year $250 billion tax relief proposal he made last year, White House Chief of Staff Podesta said last week. The President’s proposal will look very similar to his FY2000 proposal, centering on universal savings accounts (USA accounts) that provide subsidies to lower income taxpayers to help them save for their retirement. Last year’s proposal also included tax credits for school construction, long-term health care initiatives, and an expansion of the dependent care credit and the low-income housing credit. Added to his package this year will be new provisions aimed at increasing health coverage, and a proposal to expand the earned income tax credit (EITC) program for low income taxpayers. The staff of the Joint Committee on
Taxation last year estimated Clinton’s budget included $75 billion in tax breaks
over 10 years, but when netted against the President’s proposed revenue raisers, the
total package actually amounted to a $90 billion tax increase. That analysis did not
reflect the revenue impact the USA accounts. |
McCain’s Tax Package to Focus on Lower and Middle Income Americans --Republican presidential candidate Sen. John McCain, R-Ariz.., began filling in the details of his own tax plan that he said would give a tax cut to 25 million Americans with taxable incomes between $30,000 and $70,000. McCain has criticized the 5-year $483 billion tax cut plan of GOP presidential frontrunner George W. Bush because it spends the entire projected budget surplus on tax cuts and because he claims it mostly would benefit the wealthy. "I believe that my plan is the far wiser one, and more responsible one, because it does not assume that these (budget) surpluses are going to be there forever," McCain told reporters January 9. McCain plans to formally unveil his plan January 11, but aides told reporters the plan would:
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