European Stars And Stripes (Newspaper) - May 11, 1986, Darmstadt, Hesse                                Page 4 the stars and stripes sunday May 11.1986bill would be nixed expert says Washington a an upper Middle income family of four with typical deductions would gel n .i25 lax Cut under i he lax overhaul plan written by inc Senate finance committee. On the of her hand n two earner couple with no. Children and latal income of 175.000 would pay about 52,200 More in lanes if he fan becomes Law according la calculations by Ira Shapiro director of nil Lynnal Lux services for Coopers & Lybrand accountants. A four member family with 125,000.in wages unit too few deductions to itemize would pay $533 less a lax pm of 23 percent a single person earning 525,000 wages and $500 interest would pay almost exactly the same taxes As under present Law Shapiro said. The four examples indicate How varying incomes and expenses make it nearly in possible to generalize about whal groups or people would win or lose under the far reaching Bill which was approved by the committee wednesday. It is awaiting action by the Senate probably nest month. Backers of the legislation including finance committee chairman Bob pack Wood a orc. Say the big winners would be lower and Middle income families. The Las ers they say would be High income people accustomed to using various investment gimmicks to shield much of i hair earnings from taxes. But As Shapiro s calculations show per sons or families with relatively modest in come could end up paying More taxes even though the 1 probably would not know what a tax shelter looks like. The $75,000 couple your Basic yup pie couple Shapiro says is a Good  husband earns 135,000 and the wife 540,000. Each puts $2,000 a year into a Tan deferred individual retirement account. They pay state and local taxes total ing $5.035, including s375 in sales taxes. Tax bite in the. 8-hour work Day Federal taxes \ hour 43 minutes f slate local. Taxes 55 minutes housing 1 hour 34 minutes food 59 minutes tic importation 42 minutes ctothing21 minutes recreation 20 minutes Scuta Tai foundation 59,570. The closes thing they have to a tax shelter is the Ira and a Home with a High mor trafic. The couple with two children and $25,000 of wages would continue not item izing deductions under inc finance com Mittee proposal the tax liability now $2.333, would drop Losi goo. The chief reason for the big tax Cut for that family would be the increase in person Al exemptions and the Standard deduction. The personal exemption under present Law is expected to be about $1,160 per person in 1988, when the finance committee provi Sions would be fully in effect. Under the Bill the exemption would Rise la $2,000 per person. The Standard deduction for a joint re turn expected to be about $2,ti70 in 1988 under present Law would Rise to 15.000 under the Bill. Together the Standard deduction and the personal exemptions would mean the family could earn si3,000 before any income was subject 10 income tax. The $12,000 share of their income that is taxable would be taxed at a 15 percent rate. Their mortgage interest runs $16,500 a year. The interest on their automobile loan and credit cards is 15,000. They deduct $500 As miscellaneous expenses the fee for having their Tux return prepared. And they gives  Charity. Under the finance committee Bill the couple would lose the $3,000 deduction Al Lowed two earner couples. The Bill would disallow the deduction for state and local sales taxes for the 15,000 of personal inter est and the $4,000 deduction for iras. The Bottom line the couple s 17,377 tax liability under present Law would Rise to to 147,300 before any of their income would be subject to the higher 27 percent lax rate in the finance committee Bill. Shapiro assumed the couple put s2.000 into an Ira paid state and local taxes to taling $2,300 and deducted mortgage inter est of $7,700, under present Law the tax liability would be $5,520 under the Bill the family would gel a $1,125 tax Cut a 20 percent reduction. If the same family earned 11,000 More and the deductions stayed the same the taxable part of the original $47,300 what is left after subtracting deductions and exemptions would still be taxed at 15 per cent. But the extra ,000 wow be subject to the 27 percent rate. The single person earning $25,000 a year your $2,000ira contribution in this example the worker would lose deductions now claimed for an Ira 12,000union dues $300sates taxes. J198 and interest on an Aulo loan $800. He would retain deductions for of her slate and local taxes ,103 and Charita ble contributions 13,500. Since those deductions total $4,603, this worker would find it still would be advantageous to item ize rather than take la increased single person s Standard deduction of �3,000 under the Bill. The calculations assume the individual tax changes arc fully in effect. Under the Bill inc provisions reducing or eliminating deductions would take effect next Jan. 1 while the rate reductions would take effect july 1,1987. Reagan Calls tax plan giant step forward1 Washington a pics Ideal Reagan said sat urday the lax revision Bill proposed by the Senate finance committee is a giant step Forward that could boost the. Average family s income by $600 to $900 a year. The president remark in his weekly radio address from the presidential Retreat at Camp David md., were his first detailed discussion of the Bill although administration spokesmen have said he was pleased with it. The people wort Reagan said speaking of the finance committee s work. America Loday stands poised to lift off into a new age of Opportunity powered by one of the most exciting economic changes of my lifetime he said the Bill will sweep into the Irish bins of our past literally scores of unfair unwise unproductive tax shelters and will make an enormous contribution toward tax  of coarse this Bill is not perfect he said. But several months ago i wrote several members of the House specify ing the conditions that must be met for my support. This Bill meets those conditions. As far As i am concerned in is a giant step Forward Reagan said his Council of economic advisers had concluded the Bill is pro growth and  the Bill s added incentives and efficiencies could increase America s growth Rale nearly 10 percent Over the next decade. That could mean As much tit 1600 to $900 More income per household each year. Jobs could Rise an additional 4 million Over that period he said. That is Why i am asking republicans Aad democrats to unite to move this legislation through Congress As fast As possible he said. In the democratic response. Rep. Sum Lundine of new York told Reagan democrats Are prepared to work with you in a bipartisan spirit 10 achieve the most significant tax Reform in 30 years. Well work on a Compromise with the Senate so the final legislation will be an accomplishment which will Bene fit America in turn we expect you to work with us to address our disastrous deteriorating Trade situation two million american workers lost their jobs last year alone due to inc imbalance of imports Over exports meanwhile sen. John Warner r-va., told a business Council meeting in hot Springs va., saturday the Straw by to get the lax Bill through the Senate is to Start Ilon the Day the Senate goes on National television and shows Amer Ica How the Senate is dealing with the tax Bill. You Tell me which senator is going to get up and try to plug a Corporal loophole with so percent of americans in the 15 percent  he said he strategy was developed when he and Senate majority Leader Bob Dole and others were Silling around in a Circle discussing the situation. Although he said the Bill is not perfect Reagan did not specify what parti he would like changed. He and Treasury department officials however Are known to be concerned about a provision that would allow a full tax break for individual retirement accounts Only for workers who Are not eligible for company pension plans. In another major change from Reagan s original proposal the finance committee proposes to repeal a lax break for capital gains hat the president wanted expanded to inflation caused increases in the value of stocks and other assets would not be taxed. Mother s pay preserves family income study says Washington a working mothers Are preserving family living Stan Dards in two Parent households that otherwise would have experienced substantial declines in income Over the past decade says a study released saturday. If More mothers had not gone to work the loss in family income since 1973 would have been More than three times As great said rep. David obey d-wis., chairman of ids join economic committee. Income in two Parent families fell 3,1 percent from 1973 to 1984 and would Bare dropped 9.5 percent if mothers had not increased their earnings and participation in the work Force according to a statistical analysis performed for the committee. The report said family income increased on a yearly basis prior to i9t3, but the level that year has not been matched since. Me Dian family income in 1984 was 6.2 percent lower than in 1973, it said. The most dramatic decrease has been among Young men the study said with a 30-year-old Man earning 25 percent less on average in 19sj than in 1973. The increasing willingness of Ameri can mothers to assume the dual responsibility of a Job outside the Home and Rais ing a family is a major reason Why american families have retained much of the Prosperity they enjoyed in inc Early 1970s," the report said. Mathers joining the work Force Al the fastest rate Are not single Heads of House holds but those from traditional two Parent households with children under 3 years old the study found. Filing labor department statistics the report said he participation rate of single female Heads of household in the work farce increased from 3b.s percent in 1973 to 44.5 percent in 1985. Over the same period the participation Rale of married mothers with children under 3 Rose from 29.4 percent to 50.5 per cent. Although working mothers have averted a substantial decline in grass family in come. The study said additional Cost associated with iwo earner families have made the effect on net income More modest it said the extra wages Are significantly offset by Money spent on child care additional clothing transportation and services for Merly performed in the Home. The fact that More and More mothers Are nevertheless joining the work Force appears to indicate the growing degree of eco nomic necessity obey said. The committee staff said Al b preparing another study on the degree to which these expenses Cut into the additional income. K