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

DATE: MONDAY, September 20, 1993                   TAG: 9309200002
SECTION: MONEY                    PAGE: A-8   EDITION: METRO 
SOURCE: BY STEVE MARCY KNIGHT-RIDDER/TRIBUNE
DATELINE: WASHINGTON                                LENGTH: Medium

WEALTHY NOT LIKELY TO AVOID HIGHER TAXES

Higher-income individuals who must pay most of the tax increases under the Clinton economic plan can do little to shelter their income, Congressional Budget Office Director Robert Reischauer says.

The inability to shift the income will allow the government to meet its five-year plan to reduce the growth of the U.S. budget deficit, Reischauer said.

The budget office has estimated the five-year plan would reduce the budget deficit by $433 billion, while the Clinton administration forecast $505 billion.

Changes in the laws during the 1980s, especially in 1986, closed most of the loopholes that would have allowed the shifting of income to lower or non-taxed sources, Reischauer told an economic policy seminar.

"Only time will tell," Reischauer said, but "I would put my chips on the table closer to the betting" of the congressional Joint Tax Committee and the Treasury Department as far as projected revenues from the plan, he said.

CBO estimates that about 80 percent of the projected $241 billion in net new taxes over the five years will be paid by higher-income individuals, Reischauer said.

Reischauer contended that the discrepancy is "not really" a huge difference. He said it stems mostly from different assumptions about the deficit baselines - how the deficit would have grown absent the Clinton plan. The Clinton administration used a higher baseline that assumed greater defense spending than the budget office did, and expenditures closer to the rate of inflation rather than being capped at fiscal 1993 levels, Reischauer said.

The higher baselines used by the administration accounted for about $50 billion more in deficit reduction than the budget officeprojections, Reischauer said.

Also, the administration included about $16 billion in projected interest savings over five years from the Treasury's shift to shorter maturities in its borrowing plans. Because debt maturities are administrative decisions - and not decisions within the purview of Congress - the budget office did not count them as part of the savings stemming from the five-year deficit-reduction law, Reischauer said.

by CNB