The tax bill approved by the House Ways and Means Committee Tuesday is the most "pro-family" of the major tax-revision plans before Congress, according to a study by the staff of the House Select Committee on Children, Youth and Families.
Chairman George Miller (D-Calif.) said in releasing the study yesterday that the Ways and Means plan is even better than the Reagan administration's May 1985 plan (known as Treasury 2), which an earlier committee study had rated tops last August.
The new study looked at seven features of tax plans from the standpoint of whether they ensure that equal-sized families with equal income pay roughly equal taxes, whether they maintain a progressive rate that taxes low-income families at sharply lower percentage rates than high-income, and whether they produce the fewest inequalities of taxation as a result of being married.
It then rated the current versions of five plans (including current law) on a scale of 0 to 4 for 1986.
The Ways and Means bill was given 3.14 points. Miller said it tied Treasury 2 as best in providing fair taxes for low-income working families, tied with current law and Treasury 2 in providing fair taxes for families using child care and was best in providing fair taxes for average-income families.
The Ways and Means bill was rated second to the bill sponsored by Rep. Jack Kemp (R-N.Y.) and Sen. Robert W. Kasten Jr. (R-Wis.) in providing fair taxes for large families and fair taxes for two-earner families. It was rated third in providing fair taxes for single-parent families and third in providing fair treatment in cases where the law taxes a married couple more than it would if the couple lived together without being married (the "marriage penalty").
The Reagan administration proposal came in second with 2.43 points, the Kemp-Kasten measure was third at 2.14, and the bill sponsored by Rep. Richard A. Gephardt (D-Mo.) and Sen. Bill Bradley (D-N.J.) was fourth at 1.71. Miller said current law, which received 1.14 points, was the worst for families.
Here is how the select committee compared the plans for 1986:
*Large Families: Under law, a one-earner couple with four children and $27,000 income would pay 9.1 percent in income taxes, a bit less than a childless one-earner couple (12.45 percent). Kemp-Kasten would cut the 9.1 percent to 5.6 percent, Ways and Means to 5.7 percent, Treasury 2 to 6.1 percent, Bradley-Gephardt to 7.15 percent.
*Single Parents: Under law, a single-parent family with three children and $21,000 income would pay a higher tax rate (10.2 percent) than a one-earner couple with two children (8.5 percent) or a working couple with two children (7.6 percent). Kemp-Kasten was rated best because it would reduce the rate, and tax all these families at virtually the same rate (about 6.3 percent), reducing inequities. All other plans would also reduce the rates but leave disparities.
*Low-Income Working Families: Under law, a one-earner couple with two children and $11,400 income would pay 3.4 percent. All plans would reduce this but Ways and Means and Treasury 2 rated best for reducing it to less than zero, giving the family a $261 payment under the earned income tax credit.
*Average Family: Under law, a one-earner couple with two children and $31,841 income would pay 12.5 percent; all plans reduce the rate but Ways and Means reduces it most, to 9 percent.
*Two-Earner Families: The taxes of average one-earner and two-earner families would be reduced under all plans, the committee said, but Kemp-Kasten was rated best because reductions for each are most nearly equal.
*Child-Care: Ways and Means tied for first with current law and Treasury 2 by maintaining a tax credit for child care, which "helps low and average-income families more than a tax deduction."
*Marriage Penalty: Bradley-Gephardt was rated best because it would eliminate the marriage penalty for couples below $40,000, while the other plans would increase the penalty.