Tax Overhaul Sails Through Senate : 97-3 Vote Sends Reform Bill to Conference With House

From Times Wire Services

The Senate gave near-unanimous approval today to a dramatic overhaul of the federal tax code that promises a tax cut for millions of Americans while doing away with an array of popular tax breaks.

The Senate approved the bill on a 97-3 vote, setting up a conference with the House on a version of the legislation that chamber passed late last year.

Both measures, hailed as the most drastic changes in the nation’s tax laws since World War II, would curtail popular tax deductions and loopholes in return for the lowest tax rates in about half a century. They would also raise business taxes to help pay for the lower individual rates.

The Senate bill would exchange the current 14 individual tax brackets for a two-rate scheme of 15% and 27%. The House measure, however, has a four-rate structure of 15%, 25%, 35% and 38%, along with a number of other major differences that will have to be reconciled before a final bill can become law.


Nonetheless, Senate approval of the bill--which as recently as two months ago seemed impossible--makes its a virtual certainty that Congress this year will agree to a compromise plan for reforming the nation’s tax code--the issue President Reagan has made his top domestic priority.

Before passage today, Senate Republican leader Bob Dole of Kansas boasted that the bill was “an outstanding piece of legislation.” He conceded that it was “not perfect,” but expressed confidence the problems could be resolved in the conference.

Dole hailed it as a “near miracle . . . (considering) this bill was dead as a dodo bird six or seven weeks ago.”

Senate Finance Committee Chairman Bob Packwood, who guided the radical Senate plan through his panel, said he hoped to retain the main outlines of the bill when it goes to conference.


Packwood (R-Ore.), noted on NBC’s “Today” program that he would like to restore some popular deductions that his bill would gut, such as those for sales taxes and individual retirement account contributions, but noted, “each time you bring something back, you have to raise the rates a little bit (and) I prefer not to.”

In the closing hours of work on the bill, the Senate voted 54 to 39 to kill an amendment that would have preserved current laws on capital gains for farmers who earn $100,000 or less. The legislation would do away with those laws.

The Senate also narrowly agreed 50 to 47 to a non-binding amendment by Sen. Mack Mattingly (R-Ga.), that the tax code remain unchanged for five years after the pending measure becomes law. Many senators complained that it was a worthy yet unrealistic goal.