ROANOKE TIMES

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, March 9, 1990                   TAG: 9003092392
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A/3   EDITION: EVENING 
SOURCE: Associated Press
DATELINE: WASHINGTON                                 LENGTH: Medium


RICH PAYING TOO LITTLE, TAX STUDY GROUP SAYS

A tax policy aimed at encouraging investment by rich individuals and corporations is raising the federal deficit and boosting the tax burden on lower-income Americans, says a study financed by labor and endorsed by Democratic leaders.

If pre-1978 fairness were restored to the income tax, nine of every 10 Americans would pay less and the government would collect an additional $67.5 billion a year, Citizens for Tax Justice reported Thursday. That would be enough to wipe out the budget deficit in two years or less.

"The real after-tax income of the richest 1 percent of the population [averaging $400,000 a year] jumped by a staggering 110 percent" since 1977, said the a labor-financed Washington research organization. During the same period, the after-tax earnings of a $34,000-a-year family grew by 1 percent.

"We have had a massive ripoff . . . and the middle class is stuck with the bill," Rep. David Obey, D-Wis., said in endorsing the findings.

"The arrows of fairness are pointed in the wrong direction," said House Majority Leader Richard Gephardt, D-Mo.

Nevertheless, Gephardt told reporters, Democratic leaders are not ready to endorse the study's call for tax increases on profitable corporations and high-income individuals.

He said the party's leadership hopes to complete work soon on a tax policy, including whether Social Security taxes should be cut.

The report was the latest round in a partisan debate over whether Americans are better off than they were before Presidents Reagan and Bush took office.

A recent Congressional Budget Office report concluded that since 1980, the 20 percent of Americans with the lowest incomes have seen their federal tax burden rise while the wealthiest 20 percent have seen a drop in taxes.

The administration's Office of Management and Budget said the poorest 20 percent are paying the same share of the federal tax burden that they paid in 1980 while the richest, as a group, are paying a larger portion.

The Citizens for Tax Justice analysis traced tax changes back to 1978, during the Carter administration. Congress approved a tax bill that year that raised exemptions and standard deductions for all Americans but also cut the tax on capital gains, which benefited the rich.



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