Rostenkowski to Propose Tax-Credit Plan

House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) is scheduled to unveil today a proposal to provide 80% of American households with a $200- to $400-a-year income tax credit financed by raising taxes on the wealthy.

The long-awaited plan from Congress’ chief tax writer would cost $46 billion and would permanently establish a fourth income tax bracket of 35% and impose a 10% surtax on the nation’s 30,000 millionaires. Other tax-relief proposals offered in recent weeks would be funded by cutbacks in defense or domestic spending rather than by tax increases.

While House Speaker Thomas S. Foley (D-Wash.) has virtually ruled out action on a tax bill this year because of White House opposition, Rostenkowski and Senate Finance Committee Chairman Lloyd Bentsen (D-Tex.) are poised for swift action when Congress returns in January to provide tax relief to the middle class.

Foley Wednesday criticized President Bush for “pouring cold water on the idea of any tax reductions this year,” and pledged: “Very, very shortly there will be action on our side in terms of a middle-income tax cut.”

Rostenkowski’s plan, which was presented Wednesday to Democratic leaders and Democrats on the Ways and Means Committee, provides a two-year refundable income tax credit equivalent to 20% of the Social Security and Medicare payroll taxes paid by employees.