Senate Finance Committee Chairman Bob Packwood (R-Ore.) cautioned yesterday that Congress is likely to produce a significantly different tax-overhaul bill from the radical measure that goes to the Senate floor on Wednesday.
Even if the Senate passes the Finance Committee bill with little change, as some predict, a House-Senate conference committee will have to reconcile the differences with last year's House bill. The House package would impose higher taxes on businesses, while preserving more individual tax benefits.
"There is a lot of good in the House bill," Packwood told a group of business supporters of his legislation. The notion of the Senate bill overpowering the House measure in the conference committee "is not going to happen."
Packwood told the group that he likes some provisions of the House bill better than those in his own version. He declined to specify them, however.
Also yesterday, the Finance Committee released an official report and copy of its bill, which provides an average individual tax cut of $215, reducing current average tax bills of $3,347 to $3,132 when it is fully phased in in 1988. On average, Americans would get a 6.4 percent tax cut. In all, individual taxes would be cut $100 billion over five years.
The 1,477-page bill also contains numerous exceptions for businesses and individuals that otherwise would be hard hit by the bill. The favored dozens range from eight bathhouses being rehabilitated in Hot Springs (Ark.) National Park to 28 new airplanes being purchased by Texas Air Corp. at a cost of $40 million each, to two auto plants being built in Illinois and Kentucky.
The exceptions, known as transition rules, generally are proposed by senators to shield their constituents from sudden tax changes. They often are written so narrowly that they benefit no more than one or two companies, but the beneficiary is rarely named.
For example, Texas Air's planes are identified only as belonging to "an airline which is wholly owned by a corporation with which it files a consolidated federal income tax return, the affiliated group of which the airline is a member includes another airline which is wholly owned by the parent corporation of the affiliated group [and] a subsidiary of the parent corporation filed for bankruptcy on Sept. 24, 1983."
Texas Air officials could not be reached for comment, but the corporation owns Continental Airlines, which filed for bankruptcy on Sept. 24, 1983.