Senators prepare details of tax-cut package
WASHINGTON (CNN) -- As the Senate prepares to vote on a budget resolution that includes an 11-year, $1.35 trillion tax cut, the finance committee is hoping to unveil details of the tax cut by the end of the week.
Senate Finance Committee Chairman Charles Grassley, R-Iowa, has been working with his Democratic counterpart, Max Baucus of Montana, in hopes of crafting a tax bill with enough bipartisan support to survive the evenly divided Senate.
Grassley said Wednesday the tax bill will include the four major components of President Bush's tax plan: an across-the-board rate reduction; a repeal of the estate tax; "marriage penalty" relief; and an increase in the child tax credit.
But since President Bush's $1.6 trillion, 10-year tax-cut plan was shrunk by Congress and because some committee members are concerned about cutting the top rate for wealthy Americans too much, Grassley said the across-the-board rate cut will be scaled back.
Bush's proposal would have cut the top rate of 39 percent down to 33 percent, but it does not have enough support to pass the Finance Committee.
Grassley, after consultations with Baucus, proposed to the other nine Republicans on his committee to cut that top rate back to about 36 percent and phase it in over a longer period than Bush's plan for 2002-2006.
This proposal did not go over well with conservative Republicans. Sen. Don Nickles, R-Oklahoma, said if Bush's top rate cut is cut in half, it should be phased in more quickly.
Grassley called the disagreements "fine tuning."
"Within the Republican caucus, we have differences of opinions between very conservative and more moderate members. On the other hand, agreements are greater than disagreements," he said.
Those agreements, according to Grassley, are to include a repeal of the estate tax, which all Republicans and a few Democrats on the committee support.
There will also be some form of marriage penalty relief and a child tax credit increase, though the exact details of both have not yet been determined.
Sen. Phil Gramm, R-Texas, said conservatives realize the makeup of the finance committee will prevent the kind of tax cut they want, and are banking on getting more down the road when the Senate melds its bill with the House.
"Clearly, in the Finance Committee we will not get what we want to become law because we don't have the votes," Gramm said. "So we'll do the best we can, pass it on the floor and fix it in [House-Senate] conference."
Finance committee members are also pushing to include tax provisions Bush did not request, such as credits for college tuition and an increase in contributions allowed for Individual Retirement Accounts and 401(k) retirement plans.
It is unclear if those other tax provisions will make it into this tax bill. Since this is the only tax bill this year protected by rules that allow it to pass with a simple 51-vote majority, Republicans have signaled that other, more bipartisan tax-cut legislation will likely emerge later in the session.
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