Ways and Means Clears Plan to Tax All Jobless Benefits
WASHINGTON -- The House Ways and Means Committee, having agreed decisively to tax unemployment compensation, is expected to tackle bigger and potentially tougher issues this week.</br></br>The tax-writing committee began work last week on several of the most controversial issues it faces but didn't complete action on any of them. They include proposals to raise the personal exemption, repeal the charitable deduction for those who don't itemize and curtail deductions for business travel and entertainment.</br></br>There are compromises in the works for each of these provisions. One option being considered by the committee's staff is to convert the personal exemption to a credit, a move opposed by the Reagan administration.</br></br>In closed drafting sessions, Chairman Dan Rostenkowski (D., Ill.) has been exhorting his members to stay on track, and for the most part he has prevented any major derailments. On Friday, for instance, only five of 36 members on the panel sided with Rep. Brian Donnelly (D., Mass.) and Rep. William Coyne (D., Pa.), who sought to keep the limited exclusion from taxation now provided for unemployment compensation. Under current law, all benefits from federal or state sources are tax-free if the recipient's income doesn't exceed specified levels. Over that amount, a lesser exclusion applies.</br></br>By defeating the amendment, the lawmakers adopted the Ways and Means staff proposal that would tax all unemployment compensation benefits starting Jan. 1, 1987. President Reagan's tax plan contains the same provision.