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Last Protests Slow Tax Bill's Advance to Senate Passage

September 27, 1986|OSWALD JOHNSTON and MICHAEL WINES | Times Staff Writers

WASHINGTON — What Sen. Bob Packwood (R-Ore.) called "the most dramatic change in the history of the tax code" slogged slowly and inevitably toward the lawbooks Friday, with only a handful of frustrated lawmakers' protests delaying final Senate approval of a top-to-bottom revision of the federal income tax law.

Packwood, who drafted the overhaul legislation this summer with House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.), said late Friday that "any glimmer of hope" among the bi1819027315House resoundingly approved the bill, 292 to 136.

Big Vote for Bill Seen

Senate Majority Leader Bob Dole (R-Kan.) expressed hope that the measure could be passed this afternoon. If the Senate follows the House--and Packwood expects three-fourths of the 100 senators to do so--the bill would become law with President Reagan's signature.

New figures released by Congress' Joint Tax Committee forecast that 76.3 million households will receive tax cuts under the law when it is fully in effect in 1988. The tax reductions range from an average of $170 for families earning less than $10,000 annually to $841 for households in the $40,000-$50,00 bracket and to a whopping $50,122 for taxpayers making more than $200,000 a year.

An additional 20.4 million households would face a tax increase in 1988, averaging from $214 for some under-$10,000 households to $55,700 for over-$200,000 households.

The dimming chances of blocking the landmark legislation, which cuts tax rates and wipes out many personal and business tax loopholes, did not keep the bill's few vocal opponents from railing against it in lengthy evening speeches on the Senate floor.

Sen. John C. Danforth (R-Mo.), the bill's most outspoken critic, accused the Senate of selling out the nation's economic health and its commitment to balancing the federal budget by approving a "phony" tax bill that he argued would dangerously increase the federal deficit.

'Worse Than Phony'

"It's phony. It's worse than phony," Danforth said of the bill's attempt to raise money by ending tax preferences that benefited the wealthy while lowering tax rates overall. "It's going to come back to haunt us in the future."

Meanwhile, as the arguments flowed on the Senate floor, some senators and their staff members circulated updated lists of several hundred tax breaks, estimated to cost the Treasury about $10.6 billion, that had been written into the legislation. The breaks would make it easier for corporations, local governments, real estate developers, schools, colleges, universities, hospitals and sports teams to adjust to a new universe of tax planning.

Coping With Tax Changes

The "transition rules," as they are called, are technically supposed to help certain public and private sector projects, for which investments had been committed some time ago, cope with sudden changes in the tax code. Typically, they include long lists of "grandfathered" capital projects undertaken more than a year ago by giant industrial, electronic or oil exploration companies.

But, in practice, favorable tax treatment is often doled out as a way to win crucial support for the bill or to make sure that the constituents of key figures in the tax-legislation process are made aware that their interests have been protected.

The transition lists were handed over to the press Friday by Sen. Howard M. Metzenbaum (D-Ohio), who denounced most of them as unfair tax breaks "to take care of certain special interests."

The lists contain special protection for numerous state and municipal projects, hospitals, real estate developments and industries in Oregon, home state of Senate Finance Committee Chairman Packwood, and in Chicago, home district of House Ways and Means Committee Chairman Rostenkowski.

'You Didn't Find 'Em'

Packwood, told by a reporter Friday that none of Oregon's tax breaks had been evident in the first version of the tax overhaul bill passed by the Senate last summer, quipped: "That just means you didn't find 'em." The rules usually are disguised in legalistic, nearly inscrutable language.

But the largess seems widespread. House Republican leader Robert H. Michel, a key figure in lining up 116 GOP votes for the tax bill in Thursday's House vote, won a delay in application of new inventory accounting rules that Metzenbaum estimates will save $78 million in taxes for Caterpillar Tractor Co., the troubled construction equipment company in his Illinois district.

And Michel's hometown newspaper, the Peoria Journal-Star, gets exemption from new rules for employee stock ownership plans, which Metzenbaum says will cost the Treasury $4 million.

However, in the neighboring Illinois district of Democrat Lane Evans, another equipment company, John Deere, is to benefit by an exemption in accounting rules that Metzenbaum says will save it $212 million.

Sports Fans to Benefit

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