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About The daily Nebraskan. ([Lincoln, Neb.) 1901-current | View Entire Issue (Sept. 26, 1986)
Daily Nebraskan Friday, September 26, 1986 Page 2 Me wsDigjS 1L By the Associated Press Homse passes historic tax revision bill Individual and corporate tax rates to decline; 6 million to avoid filing income taxes WASHINGTON - The House of Representatives voted 292-136 Thursday for landmark legislation that would change the way most Americans pay their income taxes while shifting a big share of the burden to corporations. The bill was hailed as the most thorough income-tax revision ever. The political break down: 176 Democrats and 116 Republicans voted yes; 74 Democrats and 62 Republicans voted no, with many of them expressing concern about the bill's impact on an economy plagued by sluggish growth. The margin of victory for the measure was more overwhelming than even its staunchest supporters had predicted. Some had forecast it would pass by 30 to 50 votes. Final Senate acton this week or next would send the bill to President Reagan for his signa ture. That would mark the end of a two-year fight for an issue that Reagan put at the top of his second-term agenda. White House spokesman Larry Speakes said Reagan "welcomes today's vote by the House." "The country is now only one vote away in the Senate from enacting the president' number one domestic priority a tax system that will pro mote economic growth, simplify tax returns for the vast majority of Americans, return the code to a promise of fairness and equity, and most important of all, reduce rates for most Ameri cans," Speakes said. Proponents overjoyed - Rep. Dan Rostenkowski, D-Ill., a chief author of the bill, said, "We are going to let the American people know that their legislative process is working, that when they request of their leaders in Washington a change, that we respond." The legislation, he added, responds to a pub lic demand "that the family down the street or the corporation across town can't beat the sys tem any longer." "We must not pass up this historic opportun ity to make a contribution to those elements of the American economy that have long been neg lected: the working poor, the family, labor and capital," said Rep. Jack F. Kemp, R-N.Y. "This is the most sweeping tax-reform legisla tion in the history of this nation," Speaker Tho mas P. O'Neill, D-Mass., said in closing the debate. "If we pass this bill, the 99th Congress will assume a special place in the history of this country." The bill at a glance The bill would cut individual and corporate tax rates deeply and eliminate or reduce several deductions and exclusions, including those for Individual Retirement Accounts, consumer interest and sales taxes. On the average, indi vidual taxes would be cut about 6.1 percent less than $4 a week and more than 6 million 1H hp rirnnned from the tax rolls. Several million couples and individuals would face tax increases. The key elements of tax reform WASHINGTON Here are key elements of the compromise tax-overhaul plan passed by the House on Thursday: INDIVIDUALS: TAX CUTS: Most taxpayers will get tax cuts averaging 6.1 percent, starting gradually in 1987 and fully in effect for 1988. Several millon couples and individuals will pay more, including perhaps one-third of those with income between $30,000 and $40,000. More than 6 million lower-income working couples and individuals now on the tax rolls will pay no tax. RATES: In 1987, rates will range from 1 1 percent of taxable income to Z8V2 percent (down from present 50 percent top). Starting in 1988, three-quarters of taxpayers will pay only a new bottom rate of 15 percent. Thus, a single person could have a taxable income (after deductions and exemption) of up to $17,850 taxed at 15 percent; for a couple, up to $29,750 would be taxed at 15 percent. A 28 percent rate would trigger above those levels. Couples whose taxable income exceeds $71,900 and singles above $43,150 will pay 33 percent on part of their income. EXEMPTIONS: Now $1,080 per tax payer, spouse and dependent, this will rise to $1,900 in 1987, $1,950 in 1988 and $2,000 in 1990; afterward, will be adjusted each year for inflation. Singles with taxable income above $89,560 and couples above $149,250 will get gradually less exemption as earnings rise. Blind and elderly lose their extra exemptions. STANDARD DEDUCTIONS: In 1988, couples get $5,000, singles $3,000 and heads of households $4,400; annual inflation ad justments will follow. Blind or elderly get $600 extra per spouse if married and $750 if single. DEDUCTIONS: Kills deductions for state and local sales taxes; consumer inter est, such as credit cards and car loans; and the special writeoff for two earner couples. Severely restricts deductions for medical expenses and such miscellaneous expenses as union dues. Eliminates charitable deduc tion for nonitemizers. RETIREMENT ACCOUNTS: Keeps present law for workers not covered by com pany pensions and for those who are covered but whose income is $25,000 or less for sin gles and $40,000 or less for couples. Some IRA deduction would be permitted pension-eligible workers with incomes above those levels but would end at $35,000 for singles and $50,000 for couples. Even those not qualified for a deductible IRA could deposit up to $2,000 a year and the interest could build up tax-free until withdrawn. TAX SHELTERS: Investments geared to saving taxes rather than making profits would be in trouble. Except for some invest ments in oil and gas, most passive investment losses generated by big depreciation deductions could not be used to shield wages from taxation, real estate investments are a big target but low-income housing gets a special preference. CAPITAL GAINS: Taxed as ordinary income effective next Jan. 1. SIMPLIFICATION: Not much except for those who will become tax-exempt and as many as 13 million who will lose such a big part of their deductions that they no longer find it profitable to itemize. Capital-gains change will cut complexity but other new provisions will replace it. BUSINESSES: TAX INCREASES: Taxes on corpora tions will rise by $ 1 20.4 billion over five years. Hardest hit: profitable companies now escap ing taxes because of large legal deductions; they will be subject to stiffened minimum tax of 20 percent. Some special breaks for spe cific industries, including oil and gas, timber and banking are pared. TAX RATES: Top corporate rate of 46 percent drop to 34 percent. Small businesses will pay as lttle as 15 percent. MEALS, ENTERTAINMENT: Only 80 percent deductible, down from 100 percent. INVESTMENTS: Credit for investment repealed. Depreciaton similar to present law but less generous for buildings and more beneficials for most equipment. Over the next five years, corporations would pay a $1 20-billion greater share of the tax burden and business would lose a major incentive for job-creating investments changes that worry some lawmakers and economists. Members of both parties spoke against the measure expressing fears that it would dam age an already sluggish economy, impose another burden on the middle class or destroy jobs In their districts. The legislation, said Rep. Bill Frenzel, R Minn., will hurt economic growth, savings, job creation, exports, U.S. competitiveness, housing education and charity, Opponents' concerns Rep. Bill Archer, R-Texas, added, "There is both good and bad in this bill. The risks asso ciated with the bad outweigh hoped-for benefits of the good." "The loss of tax provisions favoring capital income may lead to a decline in investment as farmers and small business men choose to repair, rather than to replace equipment and build new plants," said Rep. Edward Madigan, R-Ill., echoing economists who testified before a congressional panel. Sponsors said the lower corporate rates and generous depreciation system in the bill would be sufficient incentive for business to invest. Anti-tax shelter features would free for produc tive use money that now is invested to avoid tax rather than turn a profit, backers say. Opponents had other problems with the bill. Some were concerned that while helping the poor and the rich, it would discriminate against middle-income families by restricting some prize deductions. Other provisions The most striking feature is a significant reduction in tax rates. The top individual rate, now 50 percent, would be cut to 33 percent, although about three-quarters of Americans would pay a flat 15 percent rate. The 46 percent maxi mum corporate rate would be cut to 34 percent. To pay for those changes, the bill scales back deductions for IRAs, medical expenses and job related expenses including union dues, and it repeals writeoffs of sales taxes and consumer interest. Non itemizers almost two-thirds of taxpayers would lose their deduction for charitable gifts. The bill answers a demand for more fairness by closing off tax shelters that allow many wealthy investors to avoid the tax collector through the judcious use of big deductions. Many corporations also would lose their tax-free status; if they report a profit to shareholders, they would have to pay a tax. Nsbraskan 34 NEBRASKA UNION 1400 R STREET Editor Managing Editor Assoc. News Editors Graphics Editor Editorial Page Editor Editorial Page Asst. Wire Editor Copy Desk Chief Sports Editor Arts & Entertain ment Editor Photo Chief Night News Editors Art Director General Manager Production Manager Advertising Manager Student Advertising Manager Jeff Korbelik 472-1766 Gene Gentrup Tammy Kaup Linda Hartmann Kurt Eberhardt James Rogers Todd Von Kampen Scott Thien Joan Rezac Chuck Green Scott Harrah Andrea Hoy Bob Asmussen Geoff Goodwin Tom Lauder Daniel Shattil Kaiherine Policky Lesley Larson Bryan Peterson Publications Board Chairman Harrison Schultz. 474-7680 Professional Adviser Bon Walton. 473-7301 The Daily Nebraskan (USPS 144-080) is published by the UNL Publications Board Monday through Friday in the fall and spring semesters ana Tuesdays and Fridays in the summer sessions, except during vacations. Readers are encouraged to submit story ideas and comments to the Daily NebraSfcan by phoning 472-1763 between 9 a.m. and 5 p m. Monday through Friday. The public also has access to the Publications Board. For information, contact Harrison Schultz. 474- 76S0. Subscription price is $35 for one year. Dnotmoetiir- QonH arirtrfiss channes to the Daily Nebraskan, Nebraska Union 34, 1400 R St , Lincoln, Neb. 68583-0448. Second-class postage paid at Lincoln, NE. rr . .?...... MIiiltT mSS Bill V UCBOIPV1H ALL InAltKiAL Mlriwuni iscuuiuli Bi-urinunnn NASA unveils space plans; completion due by 1994 WASHINGTON - NASA officials unveiled a new plan on Thursday that would require 17 space shuttle flights to assemble a space station, beginning in 1993 and finishing in 1994. The new design uses four pressur ized chambers to connect the station's living quarters with laboratories and other modules. As he presented the design to Con gress, Administrator James C. Fletcher also outlined a new management plan that would keep all station production work dealing with the manned aspects of the station in Houston. Four NASA centers, including the one in Texas, are in charge of various "work packages," that will be parceled out to contractors. The old manage ment system would have required ship ping parts manufactured by one cen ter's contractor for completion or testing by another. The savings, Fletcher said, might amount to $200 million to $300 million and considerable time. "We are going to be able to build some major portion if not all for $8 billion," Fletcher said. "If it turns out we need $10 billion, we may ask you to support us. I'm not going to come back and say we can do it for $8 billion when it will be $10 billion." The four "resource nodes" will house subsystems required for control of the space station. Those subsystems for merly were outside the station and would have needed space walks for assembly and maintenance. The design also will provide more room in the sta tion's living quarters and laboratory. NASA plans to issue preliminary request for construction proposals from contractors in November, and Fletcher said he expects the first manufactur ing to start next summer. The living quarters, called a "habi tation module" would be put in place on the seventh or eighth shuttle flight and the station could then be manned, Fletcher said. "If we have eight flights a year and start in early 1993, we will finish late in 1994," he said. It is expected crews of four will stay aboard the station for 90 days at a time. It will require eight flights a year to keep personnel in the ; station permanently. i In addition to assembly missions, ' the shuttle must also then begin perio dic logistics flights to the station. Sto-' fan said a total of 31 assembly and logistics flights would be required, and that could be accomplished by 1996. '. Fletcher conceded that the station will take most of the shuttle capacity, but there will be room for military and planetary flights. NASA expects to have its shuttle fleet restored to four orbiters by the time a start is made on the space station. Astronauts had criticized the earlier space station concept because its con struction would require almost 700 hours of space walking. Stofan said the new plan, which also would use more robots that previously envisioned, would -cut space-walking time in half and sat isfied astronauts on a design review committee. The new concept will allow more of the station to be built on the ground. In Brief Chernobyl heroes honored MOSCOW The Soviet Union on Thursday bestowed its highest honors for heroism on three firefighters at the Chernobyl nuclear plant who battled flames at the No. 4 reactor and prevented a greater nuclear disaster. Two of the firefighters, Viktor Kibenok and Vladimir Pravik, died of radiation sickness. The government newpaper Izvestia printed a picture of the surviving firefighter, Maj. Leonid Telyatnikov, on the front page beside official decrees naming them heroes of the Soviet Union. Telyatnikov, who was pictured in Soviet media in May with a full head of hair, was bald in the Izvestia photograph. Radiation from Chernobyl spead across several European countries and large areas of the Soviet Union. The losses to the Soviet economy from the disaster have been estimated by the Soviets at the equivalent of nearly $3 billion. Six of the firefighters at Chernobyl that night have since died and are buried with 20 other victims of the disaster at a special site in a graveyard just outside Moscow. Suspected killer still at large WRIGHT CITY, Mo. Residents of this farm town were growing increasingly tense and angry Thursday knowing that mentally ill Michael Wayne Jackson who is supected in three slayings, might still be in their midst after eluding a three-day dragnet. Armed FBI agents rode school buses to protect children who hadn't been kept home. Freight trains rolled slowly by officers hugging shotguns. Civic and social meetings were canceled. Business was slow except at shops selling groceries and ammunition. About 100 officers on Thursday swarmed the community and count ryside, believing Jackson remained either holed up someplace that had a source of food or lay wounded and immobilized somewhere in a field or woods. Authorities said Wednesday that they found blood in a car Jackson had stolen and were unable to find some of the bullets that hit the vehicle, leading them to believe Jackson was wounded. Jackson, 41, is a suspect in three slayings that occurred Monday, two in Indiana and one in Missouri. He allegedly abducted five people and commandeered several vehicles while making his way from Indianapolis to Wright City, about 45 miles west of St. Louis. He's also believed to have committed two robberies, armed with a sawed-off shotgun.