Mike and ALL: Article..more on budget and taxes from IBD today...
Tax Bill Called A Major Victory For Americans Of All Incomes
Date: 7/30/97
Author: By IBD Staff and Wire Reports
The Clinton administration and congressional Republicans joined in claiming victory for the nation as they reached an agreement on the budget and tax bills.
Agreement was reached late Monday night, and Senate Republicans released details of the tax package yesterday.
''It's a very, very proud moment,'' Senate Budget Committee Chairman Pete Domenici, R-N.M., said. ''It's not everything Republicans wanted, and it's not everything the president or Democrats want. But it does a lot of good things for the American people,'' he said.
The tax breaks would be of most benefit to families with children, to students and to investors. It also adds provisions that enhance individual retirement accounts.
''We have put together a bill that . . . provides better opportunities for virtually every American taxpayer,'' Senate Finance Chairman William Roth, R-Del., said.
Both sides described the agreement as tentative, subject to the drafting of official legislation. At the same time, Republicans expressed confidence the package would be passed by both houses of the GOP-controlled Congress by Friday at the latest.
The package includes a reduction in the capital gains tax rate to 20% for most taxpayers who hold investments for at least 18 months and a further reduction of the rate to 18% for assets purchased after the year 2000 and held for more than five years, the Republican summary said.
For families with incomes of less than $41,200 in 1998, the capital gains tax rate would fall to 10%. The families would also have to hold the investment for 18 months, and a lower rate of 8% would apply for assets held for five years or longer.
Under the plan, companies would receive relief from the alternative minimum tax, a tax designed to make certain that all companies pay some tax. Some small businesses would be exempt from paying alternative minimum taxes. All companies would receive relief from depreciation provisions that have increased the cost of AMT. This provision was scaled back from the earlier House version.
Other key provisions:
The package repeals a limit on issues of tax-exempt bonds relating to educational facilities, siding with the Senate plan rather than a House plan that would have raised the cap to $200 million.
The ceiling for a small bond issuance for school construction would be raised to $10 million. The package does not eliminate the so- called de minimus provision, which encourages some corporations to invest in tax-exempt municipal bonds.
The budget package calls for a five-cent increase in the tax on a pack of cigarettes in each of the years 2000, 2001 and 2002, increasing the current 24-cent- a-pack levy to 39 cents.
Airline taxes would be structured roughly as in the provision originally contemplated in the House. The 10% ticket tax on domestic flights would be phased down to 7.5% over three years with the first drop being to 9% in fiscal 1998. There would also be a new $2 per-flight segment fee.
Estate taxes would be eased somewhat. The exemption from estate taxes would be increased to $1 million over the next 10 years from the current $600,000. Family farms and small businesses would receive additional exclusions, making the exemption $1.3 million in 1998.
The $500 per-child tax credit would apply to children under the age of 17 and would be $400 in 1998 and $500 thereafter. The credit reflects a compromise with the White House that allows lower-income individuals taking the Earned Income Tax Credit also to benefit from the per child tax credit. The income ceiling for taking the full credit is $110,000 for couples and $75,000 for individuals.
The education tax package includes tuition credits, educational IRAs, tax breaks for prepaid tuition plans and interest on student loans and a mix of other provisions wanted by both Democrats and Republicans.
Access to individual retirement accounts would be expanded over the next seven years. New IRAs would also be created that would allow taxes to be paid up front.
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Not sure wether it sheds any new lite, but an interesting read.
Regards, Michael |
