La. Politicians Try to Put Stamp on Tax Plan

A Louisiana Republican helped move a revision to President Bush’s tax-cut plan through a U.S. House committee Tuesday.

At the same time, a Louisiana Democrat is exploring ways to bypass Democratic and Republican party leaders to pass a “centrist” tax-cut bill up for consideration Thursday by the Senate Finance Committee.

At the House Ways and Means Committee, Rep. Jim McCrery, R-Shreveport, was an advocate for Chairman Bill Thomas’ overhaul of the original Bush proposal.

Thomas, R-Calif., put forward a plan that would deliver $550 billion in tax cuts in a 10-year span, the same figure Bush is pushing.

But Thomas’ bill would not totally eliminate the tax on stock dividends, as Bush wants.

Instead, Thomas would reduce the tax on all capital gains and apply the lowered capital gains tax rate to dividend income.

For dividend income, the net effect would be to reduce taxation, but not eliminate it. Meanwhile, all taxpayers who had capital gains of any kind would get a tax cut.

The bill also would give business owners more generous tax breaks for equipment purchases and for depreciation than Bush initially proposed, McCrery said.

The bill retains most of the other features of the Bush plan, including acceleration of cuts in income tax rates, a higher child credit and speeding up relief from the “marriage penalty” that falls on some two-earner households.

McCrery said the size of most of those specific cuts has been pared down from Bush’s initial proposal.

That’s because the House’s fiscal 2004 budget makes room for $550 billion in tax cuts in 10 years, while Bush originally requested $726 billion.

The full House is expected to vote Friday on the Ways and Means Committee’s bill.

The Senate’s budget is a more severe cutback, projecting the tax cuts will be no more than $350 billion over 10 years.

Senate Finance Committee member John Breaux, D-La., was instrumental in passing that lower target, saying a larger tax cut would cause a dangerous rise in the federal deficit.

McCrery spoke Tuesday at a rally arranged by Citizens for a Sound Economy, a business-backed and anti-tax group.

McCrery urged them to simplify their lobbying message and concentrate on the overall size of the tax-cut package rather than its individual parts.

“It’s important we get the largest possible tax-cut number,” he said.

“If the number is not high enough, there simply will not be enough impact on the economy.”

The difference between the Senate’s $350 billion tax-cut target and the House’s $550 billion won’t significantly influence the short-term deficit, but will affect tax policy, McCrery said.

“It’s more important that we have a tax policy that you and other business people know is going to be there for the next 10 years,” he said.

In the Senate on Tuesday, Democratic leader Tom Daschle, R-S.D., proposed legislation leaning more to middle- and low-income taxpayers than to upper-income investors.

Among other things, the Daschle bill would give a $300 wage tax credit to every worker, increase the child-tax credit, accelerate marriage-penalty relief and give small businesses a 50 percent tax credit for providing employee health insurance.

It also gives $40 billion in economic aid to state governments.

Simultaneously, the Republican chairman of the Finance Committee – Iowa’s Chuck Grassley – released parts of his own proposal, including a phased reduction in the dividend tax.

Breaux’s press secretary, Bette Phelan, said Breaux hasn’t made a commitment to Daschle’s bill and is “much more focused on what’s unfolding at the Finance Committee.”

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