How '84 tax bill shapes up
It was still standing room only in the Ways and Means Committee hearing room late Friday afternoon as lobbyists filled hundreds of brown armchairs, clogged narrow aisles, and sat on the shaggy gold carpet, while House and Senate conferees put the finishing touches on the 1984 tax bill.Skip to next paragraph
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During frequent recesses in the marathon session, as members did their hard bargaining out of public view, lobbyists rushed to limousines parked outside the Longworth Building on New Jersey Avenue and used mobile telephones to call their offices with the latest tax-law changes.
The conclusion of two and a half weeks of work came at 5:17 a.m. Saturday, when the conferees agreed on a package that boosts taxes about $50 billion and cuts domestic spending some $11 billion over budget years 1984-87.
''This is a very significant tax bill in that it affects almost every taxpayer in the country,'' says Steven F. Holub, national director of tax services at Laventhol & Horwath, a major accounting firm (see chart, back page).
The bill, however, will have ''not nearly the impact on individuals'' of the Economic Recovery Tax Act (ERTA) of 1981, which cut taxes and provided for indexing tax brackets to inflation, notes Floyd Williams, tax manager at Coopers & Lybrand, another large accounting firm.
For individuals, the 1984 tax bill makes it easier to get preferential capital-gains tax treatment on investments; extends telephone service taxes; reduces the appeal of income averaging; limits family loans; repeals a tax break for interest income; and freezes scheduled reductions in gift- and inheritance-tax rates.
Individuals also will be hit by the spending-cut portion of the package. On June 21, the tax conferees agreed to $11.2 billion in benefit cuts, the biggest of which will come from the medicare program, which provides health insurance for older Americans. Among other things, the bill saves $8 billion on medicare by putting a 15-month freeze on physicians' fees, while increasing the premiums paid for doctors' services and outpatient care.
The laws surrounding corporate taxes also will be reshaped by the 1984 tax bill. Among other provisions, the bill tightens the rules governing depreciation of real estate, boosts taxes on diesel fuel, trims tax breaks on the purchase of luxury automobiles, increases taxes on hard liquor, cancels withholding of interest on new bonds sold to foreigners, and forgives $12 billion of deferred taxes owed by big exporters.
The finances of individual states also will be affected by the bill, since it places new limits on tax-exempt industrial development bonds, which critics charge drain revenue from the federal Treasury.
The 1984 tax bill now must go back to each house of Congress for final passage. Action could come as early as this week, before Congress adjourns for most of July.