The Senate Finance Committee yesterday approved by a party-line vote of 10 to 8 its version of President Carter's bill to stimulate the economy by rebating and reducing taxes.
Under the legislation, which will go to the Senate floor late next week, the Treasury would mail $50 rebate ans special benefit checks to about 200 million individuals - more than 90 per cent of the population beginning in May.
In addition, because of an increase in the standard deduction, withholding rates would be lowered slightly, probably starting in early summer.
The House passed its version of the tax bill two weeks ago.
Though all 10 Senate committee Democrats voted in favor of the bill, one of them - Floyd K. Haskell (Colo.) - said he did so only because "I think the administration deserves to have this legislation considered by the full Senate." Haskell said he would probably vote against the bill on the floor. Had he done so yesterday, the bill would have been blocked in committee; all seven Republicans and Virgina's Harry F. Byrd Jr. voted not to send it to the floor.
The Republicans and Byrd think the recommended on-time-only $50 rebate will be ineffectual; they would rather have a "permanent" tax rate reduction. Haskell, a liberal Democrat, also has doubts about the rebate, as well as about the business tax cut, which he said will go mainly to a group of companies that is already "doing very well."
The Republicans are sure to offer their rate reduction alternative as a floor amendment. A similar amendament barely failed when the House passed the tax bill. There may be quite a few other amendments offered in the Senate, particularly to the business section. Thus Senate consideration could continue all the way up to the scheduled start of the Easter recess APril 8, leaving the House-Senate conference and final passage until Congress returns April 18.
As approved yesterday, the bill has four major provisions.
First is a rebate of the 1976 taxes that will be payable in full next month. This provision is almost identical to the comparable section of the House bill. The rebate would be $50 per person covered by each tax return; a taxpayer with three dependents would get $200. But the rebate would be scaled down for taxpayers with incomes between $25,000 and $30,000, so that a taxpayer making $27,500 would get only $25 per person., while those over $30,000 would get nothing.
The second provision is also about the same as in the House bill - to send $50-per-person checks to non-taxpayers who would not be reached by the rebate, mainly lower-income families and individuals on Social Security and welfare.
Third, the bill would provide an ongoing tax cut for the 70 percent of taxpayers who do not itemize deductions, but increasing the so-called standard deduction. That deduction now ranges from $1,700 to $2,400 for single individuals and heads of household and $2,100 to $2,800 for married couples filing joint returns. The Senate committee would make it a flat $2,200 for single individuals and $3,200 for heads of household and couples filing jointly. The House bill would make it $2,400 for individuals and heads of household, $3,000 for joint returns.
Finally, the legislation would let a business choose between two days of reducing taxes - an increase to 12 per cent from the present 10 per cent in the investment credit for buying new machinery, or a new credit of up to $1,050 each for hiring additional workers.
That is close to what the President proposed. The House bill contains only a hiring credit, which the President opposed.
The Finance ommittee bill would also delay for a year sections of last year's tax bill that tightened the taxation of sick pay and income earned abroad. these provisions were supposed to be effective starting last year; the bill would not have them take effect until this year.