GOP Trims Bill That Cuts Taxes for Married Couples

Congressional Republican leaders moved rapidly Wednesday to send President Clinton the final version of a bill that would cut taxes for millions of married couples, saying that they have scaled the measure back in hopes of securing his signature.

But the White House sent a message of its own to Capitol Hill: It is concerned that Congress has embarked on a course to “obliterate a surplus that is the hard-won product of nearly eight years of fiscal discipline.”

“We cannot and will not let that happen,” John Podesta, the president’s chief of staff, said in a letter to House Speaker J. Dennis Hastert (R-Ill.).

Podesta’s letter arrived as House and Senate negotiators worked out their differences on competing bills to ease the tax code’s “marriage penalty” and did it--they contended--in a way that addressed Clinton’s concerns.

The marriage penalty causes about 25 million couples--about half of joint filers--to pay higher income taxes than if they filed as single taxpayers.

But about 21 million couples received a “marriage bonus” last year, paying less in taxes filing jointly than if they had filed as single taxpayers, according to the Treasury Department. This usually occurred when one spouse earned all or most of the couple’s income.

The House earlier this year approved a bill reducing taxes on married couples by $182 billion over 10 years. On Tuesday, the Senate passed a version cutting these taxes by $56 billion over five years and $248 billion over 10 years.

Preliminary estimates on the compromise version put the revenue cost at $85 billion over five years, which is closer to the House version.

In contrast, Clinton said in his State of the Union address that he would support a $43-billion, 10-year plan to ease the marriage penalty.

The new tax relief bill for couples could go to the full House and Senate and on to Clinton by the end of today, aides to congressional Republican leaders said.

“The president really has no excuse but to sign this bill,” said John Feehery, a spokesman for Hastert.

If he does not, GOP leaders are expected to dwell on the issue at the Republican National Convention, which starts July 31 in Philadelphia.

The tax code’s marriage penalty occurs largely because of differences in the standard deductions allowed single and joint filers and in the structure of tax rate brackets, which push couples into higher brackets faster than single filers.

The compromise measure would increase the standard deduction for couples and the 15% tax bracket for them so that each is twice that of a single taxpayer.

But it does not include a provision of the Senate bill that also enlarged the 28% bracket for couples.

Clinton recently offered his own compromise, saying that he would accept a GOP bill cutting taxes for couples if congressional Republicans approve an administration-backed plan to provide prescription drug coverage under Medicare.

Although the White House did not comment directly on the latest tax-cut proposal for couples, Podesta said that the administration is worried about a “tax and spending frenzy” in Congress.

In the last few weeks, he said, the House and Senate have considered tax bills that spend about $700 billion of the projected budget surplus over the next decade. “The president’s budget team cannot, in good conscience, advise the president to sign various spending or tax bills until we have a fuller accounting of Congress’ overall spending plans for the year,” he wrote to Hastert.