ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Saturday, February 1, 1997 TAG: 9702030047
SECTION: NATIONAL/INTERNATIONAL PAGE: A-3 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: Associated Press
MULTINATIONAL BUSINESSES, AIRLINES and U.S. corporations would all pay out more under the president's proposal.
President Clinton's new budget will propose $100billion in tax cuts over the next five years, primarily aimed at helping families with young children and education expenses, while seeking to raise $80 billion in new taxes, officials said Friday.
Both the tax cuts and tax increases represent a recycling of proposals that were included in Clinton's budget last year or promises he made during the presidential campaign.
Administration and congressional sources, who would speak only on condition of anonymity, said that $34billion in tax increases would come from extending the life of the 10 percent federal tax on airline ticket prices.
That tax expired Jan.1. Most travelers didn't see any benefit in reduced fares, however, because airlines increased fares and pocketed the money that would have gone to the federal government.
More than $40billion in tax increases will come from eliminating various tax breaks now enjoyed by U.S. corporations, officials said.
One of the biggest tax increases would occur by restricting multinational corporations' ability to avoid U.S. taxes by deducting tax payments to foreign governments. This proposal and most of the other business tax increases were in the president's budget last year.
Clinton's budget for the fiscal year beginning Oct.1 will be sent to Congress Thursday, two days after his State of the Union address.
Officials gave these details of the largest tax cuts in the budget:
nA $500 tax credit to families with children younger than 13, a scaled-down version of a Republican proposal that would apply to children 18 and younger and offer the credit to taxpayers at higher income levels.
nA tax credit of up to $1,500 for a college student's first-year tuition, with the $1,500 credit available for a second year if the student earns a B average. According to documents obtained by The Associated Press, the price tag for these HOPE scholarships would be $18.6billion through 2002.
nUp to a $10,000 tax deduction for education expenses incurred beyond the high school level. This would cost the government $17.6billion over five years.
In addition to this tax relief, the administration will also propose eliminating the capital gains tax for the sale of all but the most expensive homes and will provide for expanded use of Individual Retirement Accounts.
Republicans have criticized Clinton's capital gains proposal as offering too little relief. They have also accused the administration of paying for much of the tax relief for individuals by increasing taxes on businesses.
Senate Majority Leader Trent Lott released a Republican package of tax cuts last week that would provide $193 billion in relief, with the lost revenue made up through spending cuts.
LENGTH: Medium: 59 linesby CNB