Another central plank of President George W. Bush’s tax package fell by the wayside Friday, as leaders of the Senate Finance Committee announced a compromise designed to improve prospects for selling the legislation to the evenly-divided Senate.
“In the end, no one got everything he or she wanted,” said Republican Charles Grassley, admitting that the president’s wish to reduce the highest tax bracket from 39.6 percent to 33 percent had to be ditched for the sake of saving the whole tax reform package.
“There is not enough support, either in this committee or in the full Senate, to lower the top rate to 33,” Grassley explained.
During and after his election campaign, Bush repeatedly stated he did not believe that any American, regardless of his or her personal wealth, should pay more than a third of income to the federal government.
The compromise represents the second major modification of the president’s plan to return part of the anticipated US$5.6-trillion budget surplus over the next 10 years to U.S. taxpayers.
In the course of budget negotiations, Republicans had to agree to lop US$250 billion off Bush’s original US$1.6-trillion tax package and to spread out its introduction over 11 years instead of 10.
In the end, the size of the tax package now stands at US$1.35 trillion and includes a US$100-billion tax rebate to be enacted as early as fiscal 2002.
“I believe that we have a very good bipartisan beginning,” said Max Baucus, the ranking Democrat on the Senate Finance Committee, who has been quietly crafting the compromise with Grassley since Bush’s move into the White House in January.
He said the committee would support lowering of the top tax bracket to 36 percent, or three percentage points higher than Bush’s target figure.
In a bid to satisfy moderate Democrats, the negotiators also tilted the child credit provision of the package toward low- and moderate-income working families. “About 16 million more low-income children nationwide will benefit from our child credit,” said Baucus.
Speaking at a news conference Friday, Bush did not comment on the give-and-take in congressional negotiations, but urged lawmakers to act as soon as possible.
“It’s time for the Congress to pass meaningful, real tax reform, and I urge them to do so before Memorial Day,” said the president, speaking of a national holiday that will be marked this year on May 28.
The tax bill under negotiations in the Senate is separate from a budget resolution approved earlier this week, which contains a general outline of tax relief but is non-binding.
Republican Senate leaders plan to bring the tax bill to a vote before the end of the month.