House passes tax cut for married couples, increases child credit | TahoeDailyTribune.com
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House passes tax cut for married couples, increases child credit

WASHINGTON (AP) – The House voted overwhelmingly Thursday to cut income taxes for most married couples and to gradually double the $500-per-child tax credit, endorsing two major pieces of President Bush’s $1.6 trillion tax relief plan.

A few hours after the 282-144 vote, which included 64 Democrats in favor, the House Ways and Means Committee approved a third component of the Bush plan: a measure that would eliminate the estate tax by 2011 at a cost of almost $193 billion. That bill is expected to reach the House floor next week.

Before the votes, Bush told a news conference that Congress was well on the way to enacting ”meaningful, real, long-lasting tax relief,” even though the legislation that is speeding through the House faces almost certain change in the Senate, which is divided evenly between 50 Democrats and 50 Republicans. The House has already passed Bush’s package of $958 billion in across-the-board income tax cuts.



Bush repeated that he would not back away from his $1.6 trillion figure over 10 years and that any short-term economic stimulus tax relief – such as a $300 individual tax rebate suggested by Senate Democrats – must be part of a broader plan.

”I’ve been calling for immediate tax relief. I think it makes sense to do so. But we’ve got to have long-term relief as well,” the president said.




In the first congressional vote on the $300 rebate idea, the House defeated by 240-194 a Democratic measure that would have substituted its $50 billion in immediate tax relief for the $399 billion over 10 years in the GOP-written bill to ease the tax marriage penalty by 2009 and increase the child credit beginning in 2001.

The marriage bill would cut taxes for almost every married couple, both the 25 million with two incomes who pay a tax penalty and an almost equal number of one-earner families that the tax code gives a bonus. The standard deduction for married couples would equal twice that of a single taxpayer in 2002; for those who itemize deductions, marriage penalty relief would come gradually as the bottom 15 percent tax bracket is widened two twice that of singles between 2004 and 2009.

The bill would also raise the $500 child credit to $600 retroactive to 2001 and then gradually increase it to $1,000.

Rep. Bill Thomas, chairman of the House Ways and Means Committee, estimated that 60 million taxpayers would benefit from the two provisions when they are fully in effect.

”Under this plan, a family of four would get an additional $1,000 in tax relief to spend or save however they wish – for new clothes, college savings, or a host of other items in a family budget,” said Thomas, R-Calif.

Many Democrats objected to the measure because, they say, it is part of an overall Bush tax package that relies on uncertain future budget surplus projections, provides meager tax relief in the early years, is far more costly than the GOP estimates and is tilted toward wealthy taxpayers.

”We shouldn’t take a riverboat gamble,” said Rep. Charles Rangel of New York, ranking Democrat on the Ways and Means Committee.

But a Democratic alternative that included marriage penalty relief measures and an immediate reduction in the bottom 15 percent tax bracket to 12 percent for all taxpayers was defeated by 231-196.

The Ways and Means Committee voted largely along party lines later Thursday for the bill eliminating the estate tax by 2011. Democrats failed to win approval of an alternative they said would address the problems faced by most small businesses and farms by raising the current $675,000 individual exemption immediately to $2 million and to $2.5 million in 2010.

The GOP bill, Democrats charged, would cost far more than $193 billion in the decade after repeal and could threaten financially shaky Medicare and Social Security programs just as the baby boom generation begins retiring.

Similar to legislation vetoed last year by former President Clinton, the bill includes a provision that will in many cases increase the capital gains taxes paid by heirs when they sell assets they inherit, which would hold down the cost of the repeal bill. The first $1.3 million in gain would be exempt from this new provision, $4.3 million if the heir is a surviving spouse.

On the Net:

Congress: http://thomas.loc.gov

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