Senate Squashes GOP Effort to Abolish Federal Income Tax

The Senate on Tuesday rejected an election-year Republican effort to scrap the federal income tax.

In a 49-49 vote, lawmakers killed a proposal by Sen. Tim Hutchinson (R-Ark.) and other conservatives that would have terminated the tax code by the end of 2002--leaving it to Congress to create an unspecified alternative before then.

The House last month narrowly passed the measure.

Senate Republicans said they would wait until September to reveal their plan for using the projected $1.55 trillion in budget surpluses over the next decade for buttressing Social Security and cutting taxes.

Their decision to wait until after Congress’ August recess means that a party struggle with House Republicans over how to use the surpluses won’t be resolved until the fall, just weeks before the November elections.

That creates a strong chance that any bill congressional Republicans unite behind would serve more as a campaign document than as legislation that could garner President Clinton’s signature.

House GOP leaders have proposed using $700 billion for tax cuts and $700 billion to help Social Security face the impending retirement of baby boomers.

Sen. Phil Gramm (R-Texas), one of several senators crafting a Senate alternative, said the plan would not be ready before the recess begins and would devote “the great bulk” of the money to Social Security, not tax cuts. He and others said it would include personal retirement accounts, under which people would receive money for investments that would supplement their retirement incomes.

Supporters of the drive to eliminate the income tax had expected to be defeated in Tuesday’s Senate vote. But they contended that the GOP could still benefit politically by forcing Democrats to vote for preserving the current tax system.

The current, 7,000-page code is too long, too complex and too riddled with provisions that encourage bad economic decisions, they argued.

But opponents, including Senate Finance Committee Chairman William V. Roth Jr. (R-Del.), said killing the income tax without replacing it with a new system would throw families, businesses and world markets into economic chaos.