The State Finance Committee yesterday approved by voice vote a plan to cut the taxes of about two-thirds of all taxpayers an average of $111, beginning this year.
The plan, which would affect only those who take standard deductions, would also raise the taxes of an estimated 2.1 million single taxpayers - about 3 per cent of all taxpayers - an average of $52.
The unanimous action came as the committee continued work on President Carter's House-passed tax-cut bill to pep up the economy. Committee Chairman Russell B. Long (D-La.) said he thought the committee would finish Monday.
The tax cut would be achieved through a change in the standard deduction that is taken by nearly 70 per cent of all taxpayers - those who do not itemize their deductions.
Under present law this deduction is 16 per cent of adjusted gross income - total income for most taxpayers - subject to certain minimums and maximums. The minimums are $1,700 for single taxpayers and heads of household - and $2,100 for married couples filing joint returns. The maximums are $2,400 and $2,800.
The President proposed that this be changed to a flat deduction of $2,200 for single taxpayers, $3,000 for those filing joint returns. But that would have meant a small tax increase for single taxpayers now at the $2,400 maximum, so the House voted for $2,400 and $3, 000 instead.
Those amounts in the House bill, however, would increase the "marriage penalty" for many taxpayers. Already, when two single taxpayers taking the standard deduction get married, they lose some deduction dollars. If they take the maximum standard deduction, for example, before marriage they will be able to deduct $3,400 - $1,700 each - and alter marriage $2,100. Their penalty would be $1,300. The House bill would make that $1,800
Mindful of this, the Finance Committee yesterday approved $2,200 for single taxpayers, $3,200 for those filling joint returns. The only losers would be single taxpayers now deduction more than $2,200 - somewhere taxpays now between $2,200 and the $2,400 maximum. In addition, the Finance Committee on Thursday voted 9 to 7 to put heads of households - mostly divorced or otherwise husbandless women with children - on the same basis as married couples rather than single individuals.
However they finally turn out, these tax cuts would be reflected in lower withholdings rates a few weeks after enactment of the legislation - by late spring or early summer.Enactment would also mean that withholding so far this year has been too high for most taxpayers. Thus taxpayers would have a pleasant surprise in store next year; if the bills passes, as expected, their tax bills will be lower than usual, or their refunds higher.
The tax bill also provides for $50-per-person rebates of 1976 taxes - $200 to a taxpayer with three dependent for example - to be paid this spring. But the rebate would be scaled down for taxpayers with incomes between $25,000 and $30,000, and those over $30,000 would not get rebates.