Grassley: Support evaporating for tax rebate checks
WASHINGTON (AP) – Congress is unlikely to approve tax rebate checks this year, seeing less of a need to stimulate the economy, Senate Finance Committee Chairman Charles Grassley said Thursday. He also said the votes aren’t there to lower the highest income tax rates to 33 percent as President Bush wants.
Grassley, in an interview with Associated Press reporters and editors, said the Bush administration ”is still trying to find a way” to give taxpayers some of the budget surplus through rebate checks. But he said enthusiasm for it in Congress has waned amid evidence that the U.S. economy grew 2 percent in the first quarter and questions about how the program would work.
”There’s a feeling that maybe that is not needed now,” Grassley said. ”You don’t even hear the Democrats talking about it.”
The Finance Committee, evenly divided between Republicans and Democrats, is searching for compromise on the tax cut elements that would fit into an 11-year, $1.35 trillion package that is much lower than Bush proposed.
In the interview, Grassley laid out an ambitious agenda beyond taxes for the committee this year, including action on Medicare prescription drugs and a comprehensive trade bill.
”You’re going to find me and my committee right in the middle of the things the president wants to accomplish,” said Grassley, who travels home to Iowa every weekend and still lends a hand at his family’s 1,400-acre corn and soybean farm.
On income tax cuts, Bush has repeatedly insisted that no taxpayer should pay the federal government more than a third of his income. But Grassley said 12 of the 20 Finance Committee members now oppose reducing the current 39.6 percent and 36 percent rates to 33 percent as part of the 11-year, $1.35 trillion tax cut compromise.
”I hope we can get a consensus for something not too far above 33 percent,” he said.
One number suggested for the highest income tax rate is 35 percent, which would ensure all the tax brackets are reduced. It also is equal to the corporate income tax rate.
Democrats and moderate Republicans want more of the tax cut to flow to lower-income people, arguing that they need a greater share of the overall tax relief. Maine GOP Sen. Olympia Snowe, for example, is pushing a plan to enable lower-income people to claim the $500 child credit – which Bush wants to raise to $1,000 – even if they don’t pay income taxes.
”In order to get a compromise, we may have to accept something in that area,” Grassley said.
Other proposals to make the tax cuts bigger for lower- and middle-income people would also give Congress a way to provide more tax relief this year and next – even if rebate checks are not approved – by letting people keep more of their paychecks.
One option, Grassley said, is to drop the bottom 15 percent rate to 10 percent more quickly than Bush proposed and widen income limits on the two bottom tax brackets so that more people are paying a greater share of their taxes at lower rates.
Besides the income tax cuts, Grassley said the package would probably include versions of Bush’s proposals to repeal the estate tax, double the child credit and ease the marriage penalty paid by millions of two-income couples. The goal is to have a bill with broad bipartisan support on the president’s desk before Memorial Day, or at least out of the Senate by then, he said.
Grassley didn’t rule out adding unspecified items sought by individual senators, but he said there was little support for Bush’s plan to permit charitable deductions for taxpayers who don’t itemize.
”They’re dead until we get a … projection that says we’ve got a lot of money that we didn’t anticipate having,” Grassley said. But he added: ”In order to get a bipartisan agreement, we may have to include more, not less … but not from the president’s list.”
On other Finance Committee issues, Grassley:
-Set an Aug. 1 target for the committee to complete a bill revamping Medicare and providing a limited prescription drug benefit targeted at the neediest seniors. It would then go to the full Senate when Congress returns after Labor Day. The budget compromise between Bush and Congress sets aside up to $300 billion over 10 years for a drug benefit, about double what Bush proposed but far short of what’s needed to provide universal coverage. ”We’re going to start at the bottom of the economic ladder and work our way up until we run out of money,” Grassley said.
-Said the committee will try to write a comprehensive trade bill in June renewing the president’s authority to negotiate new trade agreements. He said he would try to find compromise on the divisive issue of protecting labor rights and the environment. The package also could include an agreement with Jordan and provisions establishing trade relations with Vietnam.
-Said Bush’s proposal to let younger workers voluntarily invest Social Security payroll taxes in private accounts shouldn’t be judged on current market volatility because the stock market will provide a better return than the current program over the long term. ”The short-term issues are offset by the security of the next 75 years,” he said.
On the Net:
Finance Committee: http://finance.senate.gov
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