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Differences between the Senate and House Republican tax cut plans

By Brooks Jackson/CNN

July 28, 1999
Web posted at: 12:07 p.m. EDT (1607 GMT)

WASHINGTON (July 28) -- The Senate and House Republican tax cut bills are nearly the same in terms of how much they cut -- $792 billion over 10 years. But these bills give different cuts to different folks.

Any tax bill favors the wealthy, but the wealthy would benefit much more under the House plan. The two bills are also so different that it will be hard for Republicans to find a compromise. But a compromise may not matter, as President Bill Clinton says he will veto either version.

Here are the highlights of the two bills:

Income Tax Rates

The House bill would cut all tax rates, with the lowest rate -- the rate paid by most taxpayers -- falling from 15 percent to 13.5 percent.

Under the House bill the rates would drop as follows:
15 to 13.5 percent.
28 to 25.2 percent;
31 to 27.9 percent;
36 to 32.4 percent
39.6 (the top tax rate) to 35.7 percent

The Senate bill would only cut the lowest rate -- the rate paid by most taxpayers -- from 15 to 14 percent

Capital Gains Taxes

The House bill would slash the capital gains tax rate from 20 percent to 15 percent, effective immediately

The Senate bill would make no change

Inheritance Taxes

The House bill would repeal the tax -- currently paid only by the richest 2 percent who die -- entirely by the year 2009, even for multimillion dollar estates.

The Senate bill would eliminate the tax on estates under $1.5 million by 2007 but cut the top rate for bigger estates only slightly to 50 percent.

Retirement savings

The House bill only has $15 billion in tax breaks aimed at retirement.

The Senate bill includes nearly $70 billion in tax breaks for retirement savings.

Marriage penalty

The House bill would ease the penalty that married couples pay by increasing the standard deduction from $7,200 to $8,600. That would not affect upper-income couples who itemize.

The Senate bill eliminates the penalty by allowing married couples who currently jointly pay more in taxes than they would if they could file separately to file single returns on a combined form.


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Wednesday, July 28, 1999

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