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

DATE: FRIDAY, March 13, 1992                   TAG: 9203130285
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A-3   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

SENATE REJECTS BID TO DROP TAX PLAN, RAISE LEVY ON RICH

The Senate rejected a bipartisan attempt Thursday to scrap a Democratic tax cut and instead use a tax increase on the rich to reduce the $1-billion-a-day budget deficit.

The $300-per-child tax cut "might slightly ease the economic squeeze their parents are experiencing but it will do little to expand opportunities for the children themselves to participate in an expanding economy," said Sen. Carl Levin, D-Mich.

The first step toward boosting the economy, Levin said, is to reduce the deficit. His amendment, rejected 57-39, would have used three-quarters of the revenue from a tax increase on the wealthy to cut the deficit and the remainder to improve roads, airports and job training.

"The deficit is a problem but it's not the only problem," countered Sen. Lloyd Bentsen, D-Texas and the chief author of the tax cut. Using the tax-increase money for deficit reduction "bypasses our concern for middle-income Americans and their children," he said.

Working into the night, the Senate adopted by voice vote an amendment by Sen. Arlen Specter, R-Pa., permitting penalty-free Individual Retirement Account withdrawals of up to $10,000 this year to buy a new car. He cited estimates this could prompt up to 6.5 million people to buy new cars.

Also adopted was an amendment by Sen. Howard Metzenbaum, D-Ohio, to deny tax deductions in savings-and-loan takeovers.

In a major victory for small business, senators agreed to allow self-employed people to deduct 100 percent of the cost of buying health insurance for themselves and their families. The change, from 25 percent under current law, would be permanent.

The political importance of the tax fight was obvious as the Senate voted on Levin's amendment. Republicans saw it as a quick way to kill the bill, which President Bush has pledged to veto.

"We wanted to kill the bill and we just about did it," said Sen. Trent Lott, R-Miss. "At least we made [Majority Leader George] Mitchell sweat for half an hour."

The amendment offered by Levin and Sen. Bob Graham, D-Fla., was the second major challenge turned down by the Senate. Bush's short-term proposal, including a major reduction in capital-gains taxes, was rejected Wednesday night on a 60-37 vote.

by CNB