At press time, House and Senate negotiators were working to bring the conference report for the tax cut package (H.R. 1836) to the floor in order to send it to the President by Memorial Day. The bill had been delayed in the Senate by numerous amendments by Democrats who charged that the plan was too expensive but finally won approval, 62-38, on May 23. A dozen Democrats joined all 50 Republicans, including Sen. James Jeffords (R-VT), to give the bill a solid victory.
Both the Senate and the House bills contain the President’s top tax priorities including a doubling of the child tax credit, income tax relief for married couples, repeal of the estate tax, and across-the-board tax cuts. The Senate bill would cut taxes by $1.35 trillion over 11 years, while the House bill would cost $1.6 trillion over the same time period.
One of the major differences between the House and Senate bills is the reduction in the top tax rate. The House bill would reduce the top tax rate from 39.6 percent to 33 percent by 2006, while the Senate would lower the top rate to 36 percent and phase in the changes by 2007. The House-passed rate reduction would cost $125 billion more than the Senate’s proposal.
The Senate bill would delay implementation of the provisions that address the marriage tax penalty until 2005. Both the Senate and the House proposals would repeal the estate tax by 2011.
Before final passage, the Senate approved a package of amendments that would expand tax credits for adoptions, for businesses that provide child care, and for pharmaceutical companies that develop vaccines for such diseases as malaria, tuberculosis, and HIV/AIDS.
Additionally, the Senate approved an amendment, sponsored by Sens. Olympia Snowe (R-ME) and Blanche Lincoln (D-AK), that would ensure that low-income workers who receive refundable child tax credits would not be disqualified from federal or state programs because their income is increased. “These provisions will extend the benefits of the child tax credit to more than 55 million children nationally, as well as 37 million families,” said Sen. Snowe. “Without refundability, almost 16 million of these children would not be eligible for an increased benefit,” she added.
Other amendments approved include one sponsored by Sen. Jeffords that would increase the dependent care child credit from $2,400 to $3,000 and from $4,800 to $6,000, depending on income levels, and one sponsored by Sen. Orrin Hatch (R-UT) that would make permanent the tax credit for research and development.
On May 24, the House Rules Committee waived a rule that would have required a two-thirds vote to permit the conference report to be considered the same day that it is reported out of the Rules Committee. A final vote is expected in the House on May 25, while the Senate may vote on May 26. When details of the final bill are available, Women’s Policy, Inc. will provide a summary.