Tax Break for Middle Class Tops Conference Agenda

Relief for middle-income taxpayers will be at the top of the agenda when congressional bargainers meet next month to draft compromise tax-overhaul legislation, the House’s chief tax writer said today.

Congressional bargainers will begin meeting in mid-July to draft a compromise between the bill the Senate passed Tuesday on a 97-3 vote and a less dramatic version the House approved last December.

“How we treat middle-income families is going to be probably the most important” issue facing the negotiators, Rep. Dan Rostenkowski (D-Ill.), chairman of the House Ways and Means Committee, said today on ABC-TV’s “Good Morning America.”

House Bill Praised

Senate Majority Leader Bob Dole (R-Kan.), appearing on the same program, said, “I think the House bill is a bit better in that area,” but he declined to say that he would support higher rates for upper-income people in order to finance more relief for the middle class.

Sen. Bob Packwood (R-Ore.), chairman of the Senate Finance Committee and the prime architect of the Senate package, said that with the Senate vote, Congress is “two-thirds of the way” to revising the tax code.

Nonetheless, Rostenkowski said there will be “long discussions” between the House and Senate on some of the most sensitive differences between the two bills, particularly the treatment of middle-income taxpayers.

The Senate bill compresses more than a dozen existing individual tax brackets--ranging from 11% to 50%--into two brackets of 15% and 27%.

The House bill has individual rates of 15%, 25%, 35% and 38%.

Democrats in both chambers have said that under the Senate bill, the wealthy would not pay their fair share of taxes while middle-income people would not get enough of a break.

Benefits Compared

Congressional tax experts have estimated that under the Senate bill, the after-tax income of people earning $30,000 to $40,000 a year would be raised by 0.4%, compared with 1.4% for those making more than $200,000. Roughly one in four people earning between $20,000 and $50,000 would face a tax increase.

Packwood has said repeatedly the rates in the Senate bill are inviolate and the “glue” that holds it together.

Senate passes bill, Page 8.