Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, August 4, 1993 TAG: 9308040064
SECTION: NATIONAL/INTERNATIONAL PAGE: A-1 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
For the middle class, the most direct impact would be relatively small: an increase in the federal gasoline tax estimated to cost the typical driver less than $30 a year.
The package, which Democrats say would pare $496 billion from budget deficits through 1998, is expected to come to a vote in Congress this week. The authors have yet to reveal many details of the plan.
Both parties say the package's consequences would be dramatic. Democrats say in the long run, it would lower interest rates and foster a healthier economy. Republicans say its taxes would force businesses to eliminate jobs.
But as for direct effects, here how some of the plan's chief components would be felt by Americans:
Income tax: Only the richest 1 percent of Americans would see their income taxes rise. For them, the top 31 percent rate would rise to 36 percent as of last Jan. 1. This would affect individuals with more than $115,000 in taxable income - after their deductions and exemptions - and couples exceeding $140,000. This translates mostly to singles with gross incomes above $140,000 and couples over $180,000. People earning above $250,000 would face a 39.6 percent tax rate.
Gasoline tax: The 14.1 cent-per-gallon federal gasoline tax would rise by 4.3 cents on Oct. 1. Using federal figures, the conservative Heritage Foundation has calculated that this would cost the average motorist $29.39 a year. Based on state-by-state driving patterns, this would range from a $10.38 increase in West Virginia to a $39.13 boost in Wyoming.
Social Security tax: About one of every five Social Security recipients now pays taxes on up to half of his or her benefits. These are single people earning more than $25,000 a year and couples making more than $32,000. Under the compromise, singles making more than $34,000 and couples over $44,000 would pay taxes on up to 85 percent of their benefits. The Treasury Department says this would affect 5.5 million Social Security recipients, or 12.8 percent of the 43 million elderly and disabled people collecting benefits.
Earned income tax credit: About 12 million low-income workers now get the credit, some as a tax refund but the majority, who owe no taxes, as a check in the mail. Under current law, they get an average credit of $1,300 a year in 1994 and a maximum of $2,877. With the bill's $20.8 billion, five-year increase, the maximum credit would rise to $3,554 when it is fully phased in by 1996. For the first time, childless workers would qualify for the benefits. Because of that and an increase in the income level at which large families could qualify, an extra 6 million people would be likely to enter the program.
Food stamps: About 25 million Americans get the food-purchasing assistance, with the average household in the continental United States receiving $244 a month. The figure is higher in Alaska and Hawaii, where food costs are greater. The Democrats' $2.5 billion increase would make it easier for people with higher housing costs to qualify, and should increase monthly allotments to many families with children.
Medicaid: The health-insurance program for the poor is being cut by nearly $8 billion over the next five years, meaning less federal aid to the states. This could result, eventually, in reduced services for the poor at some hospitals. But there is also an extra $500 million to provide free immunizations for children of low-income families.
Medicare: The elderly receiving this health-care coverage would not see their benefits drop, but reimbursements to hospitals and doctors would be curtailed. This could mean that some providers would pass their extra costs on to patients not covered by Medicare in the form of higher fees.
by CNB