GOP Tax-Cut Plan Would Benefit Rich

WASHINGTON — The Senate’s top tax writer set the stage Tuesday for yet another budget showdown between congressional Republicans and the White House by unveiling a five-year, $85-billion tax-cut package that would grant substantial benefits to upper-income taxpayers and sweep aside many of the education-tax incentives demanded by President Clinton.

Senate Finance Committee Chairman William V. Roth Jr. (R-Del.) characterized his program, which has won the support of several key Democrats on the panel, as a bipartisan effort that addresses the concerns of all parties in the budget process.

“This tax relief package is a combination of some of the best ideas from both sides of the aisle, and both ends of Pennslyvania Avenue,” Roth said. “Republicans, Democrats and President Clinton can all claim authorship.”

But the White House disavowed any credit, asserting that Roth’s proposal not only flunked the basic criteria for Clinton’s signature, but violated the terms of the budget agreement concluded last month between the White House and congressional Republican leaders.

The administration has “serious concerns with the Roth bill,” Treasury Secretary Robert E. Rubin told reporters Tuesday. “The bottom line is that Roth . . . has education proposals that are not consistent with the budget agreement . . . and in our judgment, doesn’t begin to meet the test of having a bill that in some way balances the benefits for middle-income and working Americans.”

Such statements, echoing similar criticisms expressed by aides and Clinton himself over the past week, would appear to put the White House on a collision course with Republican leaders, but some Clinton aides expressed hope Tuesday that the two proposals could be reshaped in conference before Congress sends a final tax bill to the White House.

In some respects, Roth’s package moves closer to administration priorities than the tax bill approved by the House Ways and Means Committee.

Roth’s plan does not include a House proposal that would deny families now claiming a tax credit for day-care expenses the full benefit of a proposed $500-per-child tax credit. Unlike the House bill, Roth’s plan would neither attempt to roll back the corporate alternative minimum tax designed to ensure all companies pay some tax, nor offer an inflation adjustment on capital gains--profit from the sale of stock, property or other assets.

But the Roth proposal offers much less than House Republicans provided for the education-tax breaks Clinton has declared a priority. Whereas Clinton has demanded $35 billion for the tuition tax cuts and deductions he championed during the campaign, Roth would provide only $20 billion for a severely modified version of the Clinton tax credit--and no money at all for the administration’s proposed college-tax deduction.

Moreover, nearly two-thirds of the tax benefits proposed in Roth’s plan when fully implemented would flow to families with incomes in the top fifth of the nation, according to an analysis released by the Treasury on Tuesday.

The most striking difference between the House and Senate tax cuts is Roth’s proposal to allow parents of children 12 and under the option of either claiming a $500-per-child tax credit or receiving a dollar-for-dollar credit up to $500 for money invested in tax-deferred “Kidsave” accounts that could be withdrawn without tax penalty for college expenses. Parents of children aged 13 to 16 would be eligible for the $500-per-child tax credit only for money deposited in the Kidsave accounts.