House Sustains Veto of Bill on Marriage Tax

The House on Wednesday failed to override President Clinton’s veto of legislation to cut taxes for married couples, sounding the death knell for Republican efforts to muscle broad-based tax relief into law this year.

The 270-158 vote was 16 fewer than the two-thirds majority needed to negate the veto of the so-called marriage penalty bill. The action came less than a week after the House failed to override Clinton’s veto of a bill repealing the estate tax.

A handful of smaller tax cuts remains before Congress and they stand a good chance of making it into law. Among them is a popular bill to significantly raise--from $2,000 to $5,000 a year--the contribution limit for individual retirement accounts and increase the amount workers may put into 401(k) retirement savings plans.

But the marriage penalty and the estate tax bills were the biggest, broadest tax cuts on this year’s agenda--signature initiatives by the Republican-controlled Congress. The final collapse of hopes that these measures would become law has fueled a shift in GOP strategy. Heading into year-end budget talks with Clinton, Republicans now say that they will push for reductions in the national debt.

At a White House meeting Tuesday with Clinton, Republicans proposed to earmark 90% of next year’s anticipated federal budget surplus--about $240 billion of almost $270 billion--to reducing the debt. Democrats derided the idea as a one-year gimmick rather than a long-term commitment by a party that now realizes its much ballyhooed tax-cutting agenda is a flop among voters.

“What you are witnessing is a Saul-to-Paul, road-to-Damascus, burning bush conversion,” said House Minority Leader Richard A. Gephardt (D-Mo.). “It all boils down to a public relations strategy to get out of town and win the election.”

Republicans said that the shift was simply a pragmatic acknowledgment that Clinton will not approve big tax cuts. The president is resisting their ideas, Republicans say, because he wants to use more of the surplus for increased spending.

“We know what the writing on the wall is,” said House Speaker J. Dennis Hastert (R-Ill.). “If he’s not going to give tax relief . . . the next challenge on the table is paying down the debt.”

The tax cut debate still rages on the campaign trail--to mixed effect. While cutting taxes in general has not topped the list of voter concerns, individual tax cuts such as the one for married couples and the repeal of the estate tax have been popular enough that scores of Democrats voted for them.

Meanwhile, even as GOP presidential candidate George W. Bush has promoted a $1.3-trillion, 10-year tax cut plan that includes deep reductions in tax rates, few Republicans in competitive House and Senate races have made that proposal central to their campaigns. Instead, they are running on the more narrowly focused tax-cut agenda that the party sought to enact this year.

GOP leaders hope to use this session’s tax cut votes to their advantage against selected Democrats. For example, the National Republican Congressional Committee plans to spotlight Rep. Joseph Hoeffel’s opposition to the estate tax and marriage penalty bills. The one-term Pennsylvania Democrat is considered politically vulnerable in his swing district. “We’re going to go after him with everything we have on this issue,” said Jim Wilkinson, spokesman for the GOP group.

Eliminating the marriage penalty has been a key Republican goal. The quirk in the tax code causes many couples, mostly in families with two roughly equal incomes, to pay higher income taxes than if both partners had filed as individuals. The GOP legislation would have given all couples a tax break, including those who currently receive a marriage bonus: paying less in taxes than if they filed as single taxpayers, generally when one partner is the main earner.

The vetoed bill would have increased the standard deduction for couples to make it exactly twice the break provided for single people. It also would have expanded the current 15% tax bracket so more couples would qualify for it. For low-income couples, the bill would have increased the earned income tax credit by $2,000 a year.

The bill would have reduced federal revenues by about $290 billion over 10 years, which Clinton argued was too much. He and Democratic congressional leaders called for a more limited bill that would target relief only to middle-class couples hurt by the marriage penalty.

Conceding defeat even before the House vote, Republicans said that the issue will help define the differences between the parties in the fall election.

“Married couples will have to wait longer for relief,” said House Ways and Means Chairman Bill Archer (R-Texas). “It means that they will have to vote for new leadership in the White House if they want justice and fairness in the tax code.”

In the final roll call on the bill, 49 Democrats joined 220 Republicans and one independent in voting to override Clinton’s veto. Supporting the president were 157 Democrats and one independent.

Among California House members, three Democrats joined their Republican colleagues in voting to override: Lois Capps of Santa Barbara, Gary A. Condit of Ceres and Ellen O. Tauscher of Pleasanton. All other Democrats voted to sustain the veto except Anna G. Eshoo of Atherton, who did not vote.

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What’s Left?

Attention now turns to several smaller tax cuts that remain alive. Among them:

* Retirement savings: The House has approved legislation that would provide about $17 billion over five years in tax relief by increasing tax-deductible contribution limits on individual retirement accounts and 401(k) plans. A similar bill is awaiting action in the Senate.

* Telephone tax: The House has approved a bill to repeal the 3% excise tax paid by individuals and businesses on their phone service. To expedite final passage, GOP leaders have linked the measure to a must-pass appropriation bill that is awaiting final approval by the House and Senate.

* Community renewal: A measure backed by President Clinton and Republicans in Congress would provide $21 billion over 10 years in tax breaks and credits to attract private business to the nation’s poorest regions.

* Small-business relief: Republicans have proposed to Clinton a compromise on legislation to increase the minimum wage that would link the pay hike to a package of $76 billion in tax breaks for small businesses.

* Social Security taxes: One bill likely to die is a measure passed by the House that would slash a tax paid by about one- fifth of all Social Security recipients. The bill would repeal a 1993 law that increased Social Security taxes on seniors who have annual incomes exceeding $34,000 for individuals and $44,000 for couples.