Marriage tax cut gets Senate OK


WASHINGTON - Poised for an election-year showdown with President Clinton over how to spend the budget surplus, the Republican-led Senate voted yesterday to cut taxes for all married couples - and dared Clinton to carry out his threat to veto the bill.

Eight Democrats joined all 53 Republicans present on the 61-38 tally, which sent the measure on to a committee to reconcile differences with similar legislation passed by the House. A final bill is expected to be sent to the president by the end of the week.

"Families today have many, many financial challenges - getting married should not be one of them," said Sen. William V. Roth Jr., the Delaware Republican who is chairman of the Finance Committee. "It's only fair to let families keep more of what they earn."

Republicans have maneuvered to force Clinton to veto the bill around the time of the Republican National Convention, which begins July 31, so they can showcase one of their campaign themes: that Republicans favor broad tax cuts and Democrats don't.

Clinton must act within 10 days of receiving the bill.

For years a centerpiece of the Republican tax cut agenda, the measure is intended primarily to ease the so-called "marriage penalty," which requires roughly 25 million two-earner couples to pay higher taxes than they would if they were single.

The bill would raise the standard deduction and expand tax brackets so the 21 million couples who are not subject to the marriage penalty would also get a break.

Under the measure, a two-earner couple with a joint income of $73,000 and two children would save $1,700 in federal taxes, according to lawmakers. A family of four with one parent working and income of $22,000 would receive a tax break of $500.

Clinton and many Democrats complained that the Republican bill, which would cost $248 billion over 10 years, is too generous, providing benefits to many wealthy Americans who don't need them.

They also contend it would create a new penalty in the tax code for single taxpayers.

"While I strongly support targeted marriage penalty relief, the marriage penalty bill put forth by the majority in Congress is one part of a fiscally irresponsible, poorly targeted and regressive tax plan," Clinton said in a statement.

Sens. Paul S. Sarbanes and Barbara A. Mikulski of Maryland voted with most of their Democratic colleagues against the bill.

Clinton repeated his earlier offers to negotiate with the Republicans to produce a bargain that would combine relief of the marriage penalty with a Medicare prescription drug benefit. But the Republicans want to put as much pressure on him as possible.

"This is one of the most offensive of all of the unfair provisions in the tax code, and this is a serious effort to get rid of it," said Majority Leader Trent Lott. "I predict the president will sign this because it's going to be pretty hard to explain why he doesn't want to eliminate the marriage penalty tax."

Republicans hope a Clinton veto would help make their case that the Democrats are unwilling to return excess tax revenue to the American people, despite estimates that the federal budget surplus will exceed $2 trillion over the next decade, excluding money collected for Social Security.

To highlight the issue, Republican leaders decided yesterday to withhold from Clinton - perhaps until fall - the tax cut measure enacted last week that would eliminate the federal estate tax over the next decade.

The president has also threatened to veto that bill, contending that it would help only the top 2 percent of taxpayers wealthy enough to be affected by it.

Congressional Democrats have already begun a rhetorical blitz, combining the estate tax with the marriage penalty and other Republican-sponsored tax measures that Democrats say would help mainly the rich.

"The Republican Party is up to its same old tricks, pushing yet another reckless tax scheme that favors the wealthiest Americans and leaves little money for issues people care most about: strengthening Social Security and Medicare, real education reform and a reliable prescription medicine benefit," House Democratic leader Richard A. Gephardt said yesterday.

The Republicans won't send the estate tax bill to the president until after he deals with the marriage penalty measure "so he can't declare class warfare," said Senate Republican Whip Don Nickles. "The estate tax bill is easier for him to demagogue."

With new estimates projecting that the budget surplus will be almost twice as large over 10 years as had been expected at the beginning of this year, the debate over how to spend the money is moving to center stage as the election campaigns intensify.

No public outcry arose last summer, when Clinton vetoed a sweeping 10-year, $792 billion Republican tax cut bill, calling it a risky proposal that threatened important government programs such as Social Security.

But the Republicans, who have been trying to repeal the marriage penalty since they took control of Congress in 1995, say they have a better chance to generate public support for a tax cut targeted to help families at a time when there seems to be money to spare.

The marriage penalty is an unintended result of the progressive income tax that is designed to impose higher tax rates on those who earn more. Thus, as couples combine their incomes on joint returns, many wind up paying more than they would as single individuals.

But redesigning the tax code to reduce or eliminate the marriage penalty is difficult to do without hurting other taxpayers.

Most of the 24.8 million couples who pay a marriage penalty include two spouses with comparable incomes. If only one spouse has an income - or if one spouse earns substantially more than the other - the couple tends to pay less in taxes than if both were single. About 21 million couples receive that bonus.

The Republican bill would give all married couples some benefit. The Republicans did not want to be in a position of excluding from a tax cut this year the "stay-at-home moms," who are favored by the tax code now.

"They're working just as hard as anybody else in this country," Lott said. "Our provision helps the mom working in the home."

The Democrats argue that by giving a tax break to all married couples, the Republican bill would hurt single taxpayers.

In their example, a widow with a $70,000 income is paying higher taxes than a couple earning the same amount in which one spouse collects most of the income: $14,172 vs. $10,274.

They say the GOP bill would widen the disparity by reducing the couple's tax bill to $8,743, while the widow would get no break.

"This bill will be vetoed for good reason: it doesn't fix the marriage penalty," said Senate Democratic leader Tom Daschle. "It helps those at the high end and leaves everybody else in the lurch."

The Democrats offered an alternative proposal, defeated along party lines, that would let couples file either individual or joint returns, depending on which was to their advantage. They would provide the greatest relief to couples earning less than $100,000 and none for those earning $150,000 or more. The Democrats' plan would cost $197 billion over 10 years.

Republicans protested that Democrats would deny tax relief to couples in which one partner stays home to care for children.

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