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.
