By
The Associated Press
WASHINGTON - Senate Democrats proposed a $300 tax rebate this year for every American taxpayer to inject $60 billion into the sluggish economy, an approach Treasury Secretary Paul O'Neill said would have meager impact compared with President Bush's entire 10-year, $1.6 trillion tax cut.
Senate Minority Leader Tom Daschle, D-S.D., said his proposal to immediately lower the bottom 15 percent income tax rate to 10 percent, retroactive to Jan. 1, has broad support among Democrats and Republicans - and shouldn't await passage of Bush's broader package.
"We can act now to take these two widely agreed-upon proposals off of the table, and get them to the president's desk," Daschle told reporters. "Let's get this done now."
The proposal, which would permanently lower the bottom tax rate to 10 percent at a cost of about $460 billion over 11 years, would provide single taxpayers with a $300 check this year, $600 for a married couple.
Checks would be sent to addresses based on the 2000 income tax returns and W-2 information received this year by the Internal Revenue Service; there would be a provision for people who don't get checks to file claims for the money.
The White House and its Republican allies say focusing on short-term 2001 tax relief would do limited good in the giant U.S. economy and would remove any momentum for Bush's big tax cut, even though Democrats said they could return to those proposals later. Bush's plan would provide only $5.6 billion tax relief this year.
In a speech yesterday to the National Association of Business Economists, O'Neill said the broader plan, which includes $958 billion in income tax cuts over a decade, is the "cleanest and simplest instrument that we have available to have an impact quickly. And we must cut every rate."
O'Neill said past efforts to use tax cuts as a one-time shot in the economy's arm "just didn't work."
"Some suggest we send a rebate to taxpayers now, and stop there," O'Neill said in a prepared text of his speech. "That's not good enough. If we want to change consumption patterns, we need to make a permanent change in people's tax burdens."
O'Neill added that the administration is working with lawmakers to make the Bush tax cut "more retroactive" than it currently is. Less than $6 billion of the plan would take effect in 2001 as it now stands, but O'Neill acknowledged that "retroactivity and rate reform will provide a short-term stimulus and enhance long-term growth."
Later this week, House Republicans are planning votes on pieces of the Bush plan that would ease the tax marriage penalty paid by an estimated 25 million two-income couples and gradually double the $500 child tax credit. Neither of those, however, would be effective in 2001.
The House Ways and Means Committee also is expected to approve a version of Bush's bill to gradually repeal estate taxes, amid signs that as a way of reducing the bill's price tag, the timetable for elimination could be longer than the eight years Bush sought.
