TAX CUT: GOP Plan Includes Health Deductions
With congressional Republican leaders "determined to pass a tax bill in both chambers by the August recess," the chief GOP tax writers in the House and Senate unveiled ambitious tax cut proposals, which include targeted health care deductions (Eilperin, Washington Post, 7/10). On Friday, Senate Finance Committee Chair William Roth (R-DE) proposed an $800 billion tax cut package that would, among other initiatives, make health insurance costs fully deductible for those who do not have access to employer-sponsored coverage. It would also make the costs of long-term care insurance "fully deductible on a phased-in basis." Roth said, "My tax cut plan, which incorporates proposals that have significant bipartisan support, would cut taxes for millions of Americans and address the biggest financial challenges faced by individuals and families" (Norton, CongressDaily, 7/9). A day later, House Ways and Means Committee Chair Bill Archer (R-TX) released the final version of his own $800 billion tax cut, which centers on a 10% across-the-board income tax rate cut. The AP/Nando Times reports that Archer's bill features a personal exemption for long-term care of an elderly relative, but no deduction for health insurance (7/11). That bill has already come under significant fire from Democrats, including President Clinton, who said in his weekly radio address, "It would be wrong to spend our hard-earned surplus on tax cuts before we first have honored our obligations to our seniors and to all our families in the 21st century. First things first" (Anderson, AP/Nando Times, 7/11). Treasury Secretary Lawrence Summers said yesterday that the president would veto such a broad bill. Also, the AP/Nando Times reports, members of Congress returning from recess indicated that while many constituents seem excited about the president's Medicare drug coverage proposal, few seem to be clamoring for a tax cut (Fram, 7/11). But Archer said, "If we don't cut taxes now and the money stays in Washington, the politicians will surely spend it."
100% All the Way
Still, the Los Angeles Times reports, Roth's plan, in addition to the health provisions, "is seen as more palatable to Democrats because it does not include a capital gains tax cut or a repeal of inheritance taxes." He said, "What we're trying to do is come up with a tax cut that can receive broad bipartisan support." In the GOP radio address, he added, "In offering this historic tax relief, we will not fail to meet the challenges to important programs like Medicare and Social Security ... but the rest of the surplus -- rather than go to create more government in Washington -- needs to go home" (Simon, 7/11). Health Insurance Association of America President Chip Kahn said, "HIAA has been a staunch advocate of a 100% tax deduction to help people buy private insurance coverage to finance their future long-term care costs. ... We commend Sen. Roth for his deep concern for the millions of Americans who desperately need health and long-term care insurance" (release, 7/9). The New York Times reports that Archer's committee will take up his proposal on Tuesday or Wednesday, while Roth's committee will follow a week later (Stevenson, 7/10).
Speaking of Tax Cuts
CongressDaily/A.M. reports that Missouri Gov. Mel Carnahan (D) signed a bill last week that will grant elderly residents tax credits to offset the cost of prescription drugs. He said 260,000 seniors will qualify. The law will provide a $200 tax credit for those 65 and older who earn less than $15,000 per year, and a smaller credit for those who earn between $15,000 and $25,000 (7/12).