House Passes 'Marriage Penalty' Rollback
March 29, 2001 -- Giving a boost to President Bush's push for tax cuts, the House of Representatives today approved a $400 billion reduction in the so-called "marriage penalty."
The measure is meant to provide tax relief to married couples filing joint tax returns, by increasing the standard deduction available to them.
The 10-year tax rollback, which gained passage by a vote of 282-144 in the House, is actually larger than the plan promoted by President Bush, who has been calling for a $300 billion cut in taxes paid by married couples over the next decade.
As part of the same tax package, the House also approved an increase in the child tax credit, from $500 to $1,000.
Larger Deduction: Would It Apply to You?
The House's bill eliminates a loophole that had given married couples filing separate returns a financial edge of up to $1,500 over those filing together.
In the current tax code, the standard income tax deduction for couples filing together is $7,600. But the standard deduction for individuals, including partners in a marriage filing separately, is $4,550. The House bill would raise the joint deduction to $9,100 per couple, or exactly twice the amount that can be claimed by single filers.
Bush's own, slightly different plan would allow the lower-earning partner in a joint-filing marriage to claim a deduction of as much as $3,000 from his or her income, in addition to the standard deduction granted the couple.
Additionally, the new bill would also raise the income level at which the 15 percent income tax rate would apply to couples, from $45,000 to $54,000.
The House Ways and Means Committee approved the bill in a session last week, setting the stage for today's vote.
Congress passed a similar bill last summer, but President Clinton vetoed it.
Wednesday afternoon, the House also passed Bush's proposed $1.98 trillion budget, by a vote of 222 to 205 — virtually along party lines.
Bush Is Bullish ...
At the second presidential press conference of his administration, this morning, Bush reiterated his desire to see action on the marriage tax and child credits, in addition to the income tax cut the House approved earlier this month.
"I look forward to working with both House members and Senate members once the budgets have been passed, to get tax relief enacted quickly and to get money as quickly as possible into the people's pockets," Bush said.
The House has already approved a $958 billion, 10-year reduction in the marginal income tax rate, which Bush has made the centerpiece of his legislative agenda.
Yet to be debated on Capitol Hill: a proposal to repeat the estate tax, another piece of legislation passed by Congress but nixed by Clinton last year.
Despite today's House vote, all the pieces of Bush's tax package are likely to face far stiffer resistance in the evenly-divided Senate.
... But the Democrats are Determined
Many Democrats on Capitol Hill have shown increasing confidence in opposing Bush's proposed tax cuts, which they say favor the wealthy, would squander the budget surplus and, since they would be phased in over several years, would not have an impact on the sputtering economy.
"On the marriage penalty and the child credit, most of the benefit comes fourand five and six years from now," said House Minority Leader Richard Gephardt, D-Mo., at a press conference today. "I mean, if people think from this bill today they're going to get a big child credit in their next year's tax return, you'd better take another look."
As an alternative, numerous Democrats have been lining up behind Sen. Joseph Lieberman's plan to give all taxpayers a $300 rebate as a short-term economic stimulus.
And with each tax measure that reaches the floor of the House, Democrats are continuing to question the growing size of the tax cuts.
While Bush has said that $1.6 trillion would be the "right size" for his package, the income tax cut combined with today's bill would mean tax reductions totaling about $1.35 trillion, with other items on Bush's wish list still to be considered.