With a 10 percent across-the-board income tax cut as the centerpiece, House Republicans have assembled a huge tax relief package that appeals to GOP constituencies ranging from entrepreneurs to religious conservatives.
But the plan has virtually no chance of being signed into law by President Clinton, and even Senate Republicans are pushing an alternative aimed at the middle class in hopes of attracting some Democratic support.
House Republicans, led by Ways and Means Committee Chairman Bill Archer (Tex.), portray their estimated $864 billion, 10-year tax relief plan as a fair refund for the overpayment of taxes -- even if much of it goes to people with higher incomes -- and a way to head off a new era of massive government spending.
Archer said in a statement yesterday that almost half of the tax cut would come in the form of a gradual 10 percent reduction in all tax rates over the next decade, a proposal pushed and then abandoned earlier this year by GOP leaders following Democratic criticism that it mainly helps the rich. Archer's statement pointed out, however, that people earning more than $100,000 a year pay 62 percent of income taxes.
An aide added that for a family of four with taxable income of $55,705, a 10 percent income tax cut would mean an extra $1,000.
Yet the House GOP plan has something for each of the party's constituencies: lower capital gains taxes for investors, elimination of the so-called marriage penalty for religious and pro-family conservatives, tax breaks for private school expenses and a phase-out of inheritance taxes for small firms and farmers.
The $792 billion Senate plan, meanwhile, does not include cuts in capital gains taxes, private school tax breaks or the repeal of inheritance taxes. It does cut income taxes, but only by lowering the bottom 15 percent bracket to 14 percent -- which reduces all taxes equally but would mean more to people making less.
Senate Finance Committee Chairman William V. Roth Jr. (Del.) said in yesterday's GOP radio address that his plan also stresses improved retirement savings, increased access to health care through new tax deductions and breaks for long-term care also sought by the House.
The Ways and Means Committee, which initiates all tax legislation in Congress, is expected to approve its bill by Wednesday, with the Finance Committee to follow the next week. GOP leaders hope to have a House-Senate compromise by the first week of August, but that could prove difficult given the differences between the two sides.
In any event, Democrats do not expect Clinton to sign into law any tax cut of the size proposed by Republicans.
In his radio address yesterday, Clinton repeated that any tax cuts using the $2.9 trillion in projected budget surpluses over the next 10 years must wait until Social Security and Medicare are safeguarded for future retirees, including a new prescription drug benefit.