Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, March 9, 1995 TAG: 9503090097
SECTION: NATIONAL/INTERNATIONAL PAGE: A-1 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
Some Republicans, including many senators, have said they would rather focus on deficit reduction than on tax cuts. But Ways and Means Committee Chairman Bill Archer, R-Texas, said Wednesday that his package will closely track the plan the contract envisioned, calling for $200 billion in tax cuts over five years.
``We're committed to the contract,'' Archer said. ``We ran on it, we all signed it, and we'll do what we said we were going to do.''
Like the contract, the Ways and Means measure will include a $500 tax credit per child below age 18 for families earning $200,000 a year or less, reductions in the capital gains tax rate paid by people who sell land and other property, and more generous individual retirement accounts. Republicans say they plan to pay for it with savings from revamping welfare, renewing some restrictions on Medicare and cutting other programs.
Most House Democrats will oppose the measure, which is all but certain to be approved by the Ways and Means panel next week and the full House later. The Democrats, now in the minority, complain that it would bestow tax breaks on the wealthy, paid for with cuts in programs for the poor. They also argue that tax cuts should wait until the budget deficit is heading sharply downward.
``We just think it's wrong to move forward at this time with tax cuts,'' said Rep. Benjamin Cardin, D-Md., a Ways and Means member. ``If it's later in the session, if we've seen we've moved forward against the deficit, then we should consider it.''
That view, shared by other Democrats on the panel, puts them at odds with party leaders.
President Clinton proposed $63 billion in tax reductions in December, aimed mainly at families earning $75,000 annually or less. House Minority Leader Dick Gephardt, D-Mo., has offered a similar plan.
The biggest congressional hurdle Archer's measure faces is in the Senate. Republicans there are worried about finding enough spending cuts to eliminate federal deficits and are expected to produce a much smaller tax-cut package.
``That's what I keep hearing,'' said Archer, who said he hoped the Senate might change its mind if the House approves it with ``a big vote.''
The core of Archer's bill is a proposal that would provide a $500 tax credit per child. The GOP says it would benefit 50 million families.
Democrats and some Republicans already have complained that the $200,000 income ceiling would allow tax breaks for well-to-do families, but Archer said he did not plan to change that figure.
``To try to jiggle that in a significant way would be perceived as not implementing the contract,'' Archer said.
Rep. Jim McCrery, R-La., another committee member, said he believed the package also would lower taxes for companies that must pay the alternative minimum tax, which is aimed at businesses with so many deductions or credits that they otherwise could escape paying income taxes. This reduction, popular with business, was not part of the GOP contract.
Lobbyists say Archer has decided to allow more generous depreciation for companies with large amounts of costly equipment, a provision called neutral cost recovery. Promised by the contract, Republicans had considered eliminating it because of its immense cost. But they apparently have decided to retain it because it would bring in more money in its early years as businesses rush to take advantage of it.
The Ways and Means bill also is expected to allow tax-free deductions from IRAs for home buying, higher education or health care.
by CNB