Special-Interest Amendments Stall Tax Bill

The Senate today approved a partial deduction for some state and local sales taxes, but a wave of special-interest amendments stalled a final vote on a radical plan for overhauling the federal income tax.

To help pay for the sales tax amendment, the Senate agreed to require that every person 5 or older who is claimed as a dependent have a Social Security card, in an effort to slow tax cheating by falsely claiming exemptions.

“We’ll stay here all weekend if we need to to whittle down this stack of amendments,” Majority Leader Bob Dole (R-Kan.) vowed. He even threatened to cancel the Fourth of July recess scheduled to start late next week. Despite the delay, there was no evidence the bill is threatened.

Nevertheless, Senate leaders were looking for a way to halt the flow of amendments, many of which are designed to benefit only one business, industry or project.

Had 175 Amendments

The bill came out of the Finance Committee with 175 such amendments included, and well over 200 more have been suggested since debate on the measure began June 4. With its passage in sight, several senators were chafing at the leaders’ resistance to amendments and some accused managers of the bill of playing favorites.

The amendment allowing a deduction for some state and local sales taxes was accepted by voice vote with the concurrence of the bill’s manager, Sen. Bob Packwood (R-Ore.).

The bill would continue deductions for state and local income and property taxes but would repeal the write-off for sales taxes. The tax overhaul plan passed by the House would continue full deduction of all state and local taxes.

Under the amendment, sponsored by Sens. Slade Gorton and Daniel J. Evans, both Washington Republicans, a person whose state and local sales taxes were higher than state and local income taxes could deduct 60% of the excess. For example, a family that paid $1,200 in sales taxes and $800 in income taxes could deduct all the income tax plus $240--60% of $400.

Largest Impact in 14 States

A person who paid $1,000 in sales tax and no income tax could deduct $600.

The amendment would benefit any taxpayer in any state who paid more sales tax than state and local income tax. It would have the largest impact in 14 states where sales taxes are a bigger source of revenue than income taxes.