Ditto -- today's WSJ. Politics & Policy
Senate Republicans Advance
Passage of Tax-Relief Bills
By JIM VANDEHEI
Staff Reporter of THE WALL STREET JOURNAL
WASHINGTON -- Senate Republicans pushed toward passage of their sweeping agenda to cut taxes for inheritances, retirement savings, telecommunications and businesses that create jobs in poor areas.
The Senate's main event was a lengthy debate over the wisdom of repealing estate taxes, but Senate Republicans won concessions Thursday to consider in effect their entire tax-cut agenda during a two-day marathon ending Friday.
By Friday night, Republicans will return "surplus money" to voters and "some sanity to the tax code," said John Czwartacki, spokesman for Senate Majority Leader Trent Lott (R., Miss.). Mr. Czwartacki predicted every GOP tax-cut bill would pass with little Democratic support.
The Senate is expected to cap the bitterly partisan debate by approving a 10-year, $250 billion tax-relief package for married couples.
The legislation would increase the tax exemption to $8,800 and expand tax brackets to protect couples from paying higher taxes than if they filed individually. It also would shield middle-class couples from paying the alternative minimum tax and would provide tax breaks to single-earner families.
Political Convention
The House has passed a similar bill, and Republicans plan to send their marriage-penalty relief plan to President Clinton on the eve of this summer's political convention. Mr. Clinton has promised to veto the bill, as well as the GOP plan to repeal estate taxes by 2010 at a cost of more than $100 billion over 10 years.
Under current law, estates valued at more than $675,000 for an individual and $1.35 million for couples are subject to the tax. The exemption will rise to $1 million for singles and $2 million for couples by 2006. The Senate-passed measure would gradually wipe out taxes on inheritances by increasing the exemptions and decreasing the tax rates, which rise as high as 55% for the richest estates.
The estate-tax repeal, long ridiculed by Democrats as an absurd break for wealthy U.S. residents, suddenly has emerged as one of the GOP's most potent political plans.
Why? GOP strategists credit a clever lobbying campaign by antitax activists to rename it the "death tax," a record-size budget surplus and a steep rise in personal wealth.
Now, a majority of Americans favor a complete repeal, despite a concerted campaign by Mr. Clinton and Democrats to cast the repeal as a costly gift to the rich. They have even tried to link this tax cut to their plan to provide Medicare recipients a prescription-drug benefit, an even more popular idea among voters.
President Clinton told a cheering NAACP crowd Thursday that Republicans want to "spend $100 billion on repealing the estate tax and give 50% of it to the top one-tenth of 1% of the population, and not spend money on drugs for our seniors."
The National Association for the Advancement of Colored People crowd loved the rhetoric, but it has done little to chip away at the sturdy wall of Democrats supporting at least a limited repeal of the estate tax.
R&D Tax Credit
The Senate voted nearly unanimously to extend permanently the research and development tax credit, which last year was extended by five years.
Republicans believe they also will pass:
A gradual repeal of the 102-year-old, 3% tax on telecommunications originally imposed to finance the Spanish-American War. The plan, which has cleared the House, would cost about $20 billion over five years, according to congressional estimates.
A package of tax breaks designed to stimulate investment in impoverished inner cities and rural areas. The measure would eliminate capital-gains taxes on assets sold in designated community-renewal zones, and provide a variety of additional tax credits to foster growth. The plan would cost about $20 billion over 10 years and is supported by Mr. Clinton.
A major expansion of tax-friendly retirement accounts. Contribution limits to individual retirement accounts would gradually rise to $5,000 from $2,000; contribution limits to other savings plans, such as the popular 401(k), would increase; income limits on who can make deductible IRA limits would increase and the cap imposed on "Roth IRAs" would be eliminated.
Write to Jim VandeHei at jim.vandehei@wsj.com1
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