Senate Panel Breaks Logjam On Tax Cuts --- Committee Settles Disputes On $245 Billion Plan, Moving It Toward Vote
WASHINGTON -- Congressional Republicans this week move a step closer to their expected showdown with President Clinton as Senate tax writers push their $245 billion package of breaks for tax-paying families, investors with capital gains and businesses.</br></br>In the key decisions capping two days of private wrangling, the Republican members of the Senate Finance Committee Friday agreed that a proposed $500-a-child tax credit should be permanent, as the House and party conservatives demand, but they set lower income limits for eligible families. And the senators said lower capital-gains taxes shouldn't be retroactive to Jan. 1, as the House and Wall Street want, but should take effect for assets sold as of last Friday.</br></br>The Senate package, based on House Republicans' "Contract With America" tax cuts, also would expand Individual Retirement Accounts, as financial interests sought; slash or even wipe out the estate taxes for many family-owned small businesses and farms; and provide relief to corporations that pay the alternative minimum tax. Together with the family credit and capital gains relief, those provisions and others are aimed at cutting taxes $245 billion over seven years to offset the political pain of the Republicans' spending cuts to balance the budget.</br></br>The Senate Finance Committee measure also would extend some business tax breaks that have expired, chiefly a 20% credit for research costs, and create some others. It would offset the cost of those benefits by curbing tax advantages for pharmaceutical manufacturers and other companies with operations in Puerto Rico, for corporate-owned life insurance, movie studios, family-farm corporations such as Tyson Foods Inc. and others.</br></br>Chairman William Roth (R., Del.), said the committee will meet in open session Wednesday to consider the package, which then will be added to a separate budget-balancing measure for a full Senate vote. Majority Leader Robert Dole of Kansas called it "a tax package that keeps our word to the American people," and said Senate debate on the combined budget and tax measure could begin next week. But various technical and political hurdles probably will cause delays.