European Stars And Stripes (Newspaper) - June 9, 1986, Darmstadt, Hesse                                Daily a Magazine 1 effects Lof Senate tax proposal compared win current Law using 1986 tax rates. I infill iks ipil81 income Kami salary  dividend income less contribution to an Ira adj Slad grass income deductions interest expense Aulo interest expense credit cards sates tax state tax employment related tuition total deduction Standard deduction exemptions Zero Brocket amount total deduction end elem Puonti taxable income income to tax Cost As result of Senate proposal Chicago to Juno graphic source. Emit & Lunney current serum Law option $25.000 25,000 140 14u 1,000 $24.140 25.140 1.440 140 420 417 825 625 2,000 1j49 4,902 12,514 4,902 $3,000 1,080 2.000 2.480 3.502 $5.000 20,538 $20.140 3,213 $3.326 113 income items salary no qualifying dividend income net capital gains losses on limited partnerships less contribution to Ira deduction Tor married couple when both work Al listed Gross income Fetiu Ottona slate and local income tax peal estate taxes general sales tax Home mortgage interest Home improvement loan unsecured interest Avito Loans croat card interest charitable contributions tax return preparation fees. Investment Publ Kalkis Etc exemptions Zero bracket amount total deduction and exempt Tona taxable Floc Oftle income tax tax Cost As result of Senate proposal cur Ort Senate Law option 100.000 $100,000 700 700 2.000 5,000 5,000 4,0001 3,000 190.700 $105,700 $2.500 $2,500 2.000 2,000 654 15.000 15.000 2,800 2,600 3.000 2.900 1,050 1.500 1.500  2.160 4.000 3,6701 28,194 30.700 $62,506 75.000 $15,517 16,734 j1.217 income salary interest and no qualifying dividend income lass contribution to Ira adjusted Gross income sum and local income Tei Fusai Eutaw taxes general ales to Horn mortgage interest credit card interest automobile loan interest charitable contributions exemption Zero bracket amount total deduction a andeits Mittone taxable income income Tai tax saved As result of Senate proposal current Swett Tow option  $40,000 330 330 3.250 $33,080 $40,330  1,000 750 7so 67j 5,500  210 u2 330 500 500 4,320 6,000 3.6701 9.914 16.060 $18,166 $24.250 4,144 $3.638 ss06 senators Are squaring off this month on a a overhaul Bill that could Allec in taxes paid by americans for years 1o coma Here Are answers to some frequently asked questions about the legislation a a Ell the Effort at tax Reform Over the year Why a thai Bill Given Yueh a Good Chance of becoming Law it takes Aboul 6 million of the poorest families and Individuate Oft the income tax Rolls enl rely. Ii cuts tax tales for most individuals and corpor Allons a goal of conservatives. La reduces the importance of deductions which Are most beneficial 1o the wealthy thai change pleases liberals. And it seeks to treat businesses More evenhanded by. So All the loophole Are gone Mot by a Long shot. Special provisions benefiting the Oil and Gas industries Limber banking mining and tax exempt municipal Bonds would remain. Some workers Are Spiel Beaute Lihty would Low their individual retirement account deduction. Aran l Tho a mainly for the Rich nol at All. According to the internal Revenue service 77 percent Ottha deductions claimed for iras in 19b4 were on returns tiled by people making less than $50,000 a year Why take them away to save Money to pay for the lower tax Rales. The same could be said for almost every deduction and exemption adversely aft acted by the Bill. What exactly would happen to my Ira ii Vou Are not eligible Tor a pension plan sponsored Humour employer you could continue getting an Ira. Fol Okise you lose the deduction. You still suld Deposit up to $2,000 a year in an Ira but it would note deductible. Interest earned by that s5on would remain tax free until withdrawn As Roui whatever you already have in your Ira. Tax Reform debate what s it All about by Jim Luther associated press would t i be tatter off doling out my Ira that would depend on your Ege. Your present tax bracket and the bracket you expect to be in when you retire. In Many cases you would be better Oft continuing the Ira even without the deduction. If you withdraw the Money before age s9vi, the irs will hit you with a 15 percent Penally. I keep my mortgage interest deduction. What if 1 hive to borrow Money to and my kid to College that s consumer merest and it would not be deductible. Neither would a car loan. If you borrow to invest. Only the investment interest expense that does not exceed investment income could be deducted. For example if the income from your investment is $1,000, you could deduct up to a maximum of $1.000 of interest on the loan. Could i Lake out a second mortgage on my Horn us the Money to buy an Boal and deduct the inter apparently yes. But efforts will be made in the Senate to close Oil that possibility. The deduction for utter and local Taxe Lin l a big an i tue a it Rai in the Houi 1at year. The finance commit Lea Bill preserves All the deductions except Lor stale taxes which would be repealed. The House Bill keeps them Al. Finance committee chairman Bob Packwood whose state of Oregon has no sales Ian says the final Bill is Likely to preserve the sales tax deduction too. Why would the Bill take away my deduction Jan. 1,1967, and not Cut my tax Rale until in month later to save Money. The big increases in Standard deductions would be delayed until Jan. 1, 198b. Personal exemptions now $1,080 would go to $1.900 Jan. 1, 1987, and lo$2, year Taler. Wll him Bill make thing simpler several million people who itemize will lose Many of their deductions and thus probably will be better off taking the Standard deduction. That s simpler. Those who continue to itemize win find Little slip Lilica Ion. But Doeman t reducing the number of tax brackets now 14 for Couplet and 15 for singles to two make it Impler almost All taxpayers with taxable incomes under $50.000 now compute their taxes by looking at a table they Don t even know what their rate is. Cutting the number of brackets will not change that. So How does All ii affect me it All depends on the amount and Type of income family size and deductions. On the average and this is a Lally meaningless figure individuals would get a 6.3 percent tax reduction a tally or individual whose income is Between $30,000 and $40.000, Lor example would average a 5-percent Cut. Some people at that level would get much More some would lace a tax increase. What the timetable the Senate debate could last until Early july. Then a conference committee of senior members of the House and Senate Tan writing Comuni Ittzes will spend perhaps a month working out a Compromise which would be submitted to the House and Senate for final action. Why Doe the Bill Cut tax Tor most individual a the government deficit tuition improved mat much the deficit is gelling smaller but it s a Long Way Iron disappearing. Ii either the House passed tax Bill or the finance committee version becomes Taw Congress and president Reagan will have decided that corporations should be paying about $20 billion More a year in taxes and that the Bonanza should be used to reduce individual taxes not to Cut 1he deficit. That position is even held by Many who argue 1hat the Keilch was caused in great part by the big tax Cut of 1981. Monday june 9, 1986 the stars and stripes Page 13