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GOP Leaders Vow Quick Drive to Cut Capital Gains Tax : Congress: Key Republican lawmaker also wants to explore elimination of federal income tax. Tough welfare reform is another part of the agenda.

November 11, 1994|MICHAEL ROSS and ELIZABETH SHOGREN | TIMES STAFF WRITERS

WASHINGTON — The new Republican leadership of Congress vowed Thursday to push for an immediate cut in the capital gains tax early next year, and the GOP chairman-designate of the House Ways and Means Committee said he plans to explore the possibility of eliminating the federal income tax altogether.

In addition, congressional Republicans must enact welfare reform legislation that strips most recipients of benefits after two years with no government safety net--even if that forces indigent parents to give up their children, said Rep. Bill Archer (R-Tex.), who is in line to take over the Ways and Means panel.

"If we're going to be serious about having a program that requires work, then you've got to be in the position to say: 'You lose your welfare benefits and if the children cannot be supported by you, they have to be put into foster homes,' " Archer said in an interview.

The Texas conservative is the first Republican committee chairman to begin spelling out details of his legislative priorities in the wake of Tuesday's electoral landslide. But the likely Republican chairmen of several key House and Senate committees served notice that they will seek to reverse some of the changes enacted since President Clinton took office and steer the nation into a sharp, Reaganesque right turn.

For the Record
Los Angeles Times Saturday November 12, 1994 Home Edition Part A Page 4 Column 2 National Desk 2 inches; 48 words Type of Material: Correction
Welfare Benefits--Because of an editing error, a story in Friday's editions misstated plans by congressional Republicans to change eligibility for welfare benefits. The story said that illegal immigrants would be denied assistance. Illegal immigrants are already ineligible; the Republican plan would end benefits for legal immigrants.

Many of the proposed tax cuts are perennial GOP priorities, including the reduction of taxes paid on capital gains--the profits from selling stocks, bonds and other investment assets. And even before the election, the Republicans' "contract with America" had called for a two-year limit on welfare with no guarantee of a fallback government job.

But weighing the eventual elimination of the income tax, the primary source of federal revenues, represents a radical departure from mainstream tax policy. And enforcing a two-year limit on welfare, including food stamps, so strictly that poor families could be forced to place their children in foster homes would be Draconian even by conservative standards.

Some analysts had expected the Republicans to moderate their more controversial positions once they take control of Congress. Archer said that, on the contrary, their electoral victories if anything will make their positions even "tougher."

"We have a responsibility now to roll up our sleeves . . . and deliver," he said.

Rep. E. Clay Shaw Jr. (R-Fla.), likely chairman of the Ways and Means subcommittee on human resources, which will handle welfare reform, said the bill he plans to draft will follow Archer's prescription.

While it seems improbable that Congress will vote to scrap the federal income tax any time soon, the conservative wave produced by this week's midterm elections appears to have made some kind of tax reduction almost a certainty next year.

Senior Clinton Administration officials conceded Thursday that the White House is likely to propose its own broad, middle-class tax cut in an effort to blunt Republican initiatives. "I think the chances may be going up that we will do a tax cut," said one senior official who requested anonymity.

Archer and other senior Republicans made it clear that the Democrats face wrenching changes inside Congress as well as in policy initiatives, including reductions in committee assignments and staff sizes, as they slip into minority-party status after losing control of Congress for the first time in 40 years.

Preparing to replace Rep. Sam Gibbons (D-Fla.) as chairman of the pivotal Ways and Means panel, Archer said his first order of business will be a major revision of the nation's tax laws to promote savings and investment. The changes are designed to carry out provisions of the GOP "contract," which was signed by more than 300 Republican candidates.

Among the immediate priorities: cutting the capital gains tax rate, phasing out the "marriage penalty" that taxes married couples at higher rates than two single people living together and raising the earnings limit on outside income for Social Security recipients.

In addition, Archer said that within the first 100 days of the new Republican Congress, he will seek to restore tax-sheltered individual retirement accounts for upper-income earners and approve a $500-per-child tax credit for families.

The incoming Ways and Means chairman said a longer-term goal is the "complete replacement" of the current system of income taxation in favor of a "national consumption tax," or sales tax, that could serve as an "engine to drive job creation . . . and economic activity."

Asked how the proposed tax cuts could be enacted without violating congressional budget rules and running up the federal budget deficit, Archer said the GOP contract had identified "innumerable" ways to cut spending and achieve savings in other areas.

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