US House of Representatives Passes Tax-Cutting Bill

Mike Godfrey, Tax-News.com, Washington

09 March 2001

The US House of Representatives yesterday passed the first part of President Bush's tax-cutting package, voting through the $958bn 10-year program of income tax changes by 230 votes to 198 - ten Democrats voted for the Bill, along with all Republican Representatives.

Speaking from Fargo, North Dakota, on his nation-wide tour to drum up support for tax-cuts, President Bush told thousands of supporters immediately after the vote: "One house down and now the Senate to go. The American people had a victory today. The American family had a victory today. The American entrepreneur had a victory today."

Speaking during a debate notable for a complete absence of any of the much-touted bi-partisan spirit, majority leader Dick Armey of Texas, said: "The American people are paying the highest taxes in peacetime history. We need to get that money out of Washington and into the pockets of the American people, and we need to do this as soon as possible."

Minority leader Richard Gephardt of Missouri said that the Republicans pushy tactics had killed bi-partisanship: "George Bush has not changed the climate in Washington," he declared. Democrats objected to passing the Bill before the budget had even been discussed. Gephardt asked: "Will we have the funds to do what (the President) wants to do, what we want to do in education? Will we be able to take care of Medicare and Social Security."

All eyes are now on the Senate, where there is currently no majority for the tax legislation. Senator Charles E. Grassley of Iowa, chairman of the Finance Committee, compared the tax bill to a river. "In the House of Representatives," he said, "the river starts out high in the mountains, very swift flowing. As it reaches the Senate, we're a bit downstream. The river moves slower." Still, Mr. Grassley said, a tax bill will become law "before spring turns to summer."

The legislation approved by the House today would lower income tax rates in stages, ending with just three rates of 33%, 25% and 10%. When fully effective in 2006, the rate reductions would save middle-income taxpayers a few hundred dollars a year and the wealthiest taxpayers tens of thousands of dollars. But in percentage terms, taxpayers in the higher brackets will get smaller tax cuts that those in the lower brackets. 4 million tax-payers would drop out of the tax net altogether.

Later in March the House will take up the other aspects of the Bush package, including repeal of the estate tax, tax breaks for married couples and an expanded tax credit for children.

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