Gop Plan Expands Lowest Tax Levels Proposal Would Put More Incomes At 15%

Majority Republicans in Congress are considering a plan to tax more income at the lowest level of 15 percent, officials said Wednesday, a proposal that would cut taxes for millions of middle-income individuals as well as families.

These officials, who spoke on condition of anonymity, said the proposal had emerged recently as an alternative to a phase-out of the “marriage penalty,” which requires some two-earner couples to pay more in taxes than they would owe if they were filing returns individually.

Several Republicans interviewed stressed that the GOP leadership has made no decision on what type of tax cuts to propose when Congress convenes for the year, and likely wouldn’t make one until spring.

Under the proposal, the current 15 percent tax bracket would be expanded to apply to some income that is currently taxed at the next-highest rate of 28 percent. The size of the adjustment would depend on the amount of money that tax-writers decide to make available for cuts.

In political terms, broadening the 15 percent bracket would bestow tax cuts on childless couples or individuals who were left out of the $500-per-child tax cut that Congress passed last year and President Clinton signed into law, or taxpayers who didn’t qualify because their children are over 16.

One lawmaker, Sen. Paul Coverdell, R-Ga., has proposed legislation that would tax single individuals up to the first $35,000 of taxable income at the rate of 15 percent, as opposed to the $25,350 in effect for 1998. For married couples under his plan, the 15 percent bracket would be extended to the first $50,000 rather than $42,350. For single heads of households, the bracket would expand to $50,000 taxable income from $33,950.

Coverdell, who is a member of the GOP leadership, estimated the cost of his plan at $25 billion for one year.

In announcing his proposal earlier this week, Coverdell said the approach directs “the vast majority of the relief” to the lower- and middle-income taxpayers as well as marking a step toward a flatter, simpler tax code.

Rep. Bill Archer of Texas, the chairman of the tax-writing House Ways and Means Committee, told reporters Tuesday his panel “will be considering broadening the 15 percent rate” and would hold hearings on that subject as well as other taxcut proposals. An aide said that by his comments, Archer was not attempting to indicate a preference for any particular tax cut.

Separately, the Senate Finance Committee chairman, Sen. William V. Roth Jr., R-Del., announced his tax priorities during the day for the coming congressional session, stressing additional steps to reform the Internal Revenue Service.

In terms of a tax cut, Roth declared that any budget surplus should be returned to the taxpayers rather than spent. He said his preference was for an across-the-board reduction if the surplus is big enough to accommodate one.

The impetus for the change in the lowest tax bracket came in part from Stephen Moore, an official with the Cato Institute, a libertarian think tank in Washington. In a telephone interview, Moore said he had suggested it as a way to provide relief to middle-income taxpayers who did not get a break from the 1997 tax cut.

One GOP congressional aide listed the bracket change and the marriage penalty as the two issues lawmakers are most interested in having in this year’s tax bill.