European Stars and Stripes (Newspaper) - September 25, 1989, Darmstadt, Hesse                                Monday september 25. 1989 the stars and stripes Page 9 demos want to burst the Bubble tax quirk at heart of political Battle Washington a in Washington when some people still speak of simplicity and Las Law in the same sentence and $100.000 is described As Middle income they be just discovered a new. Tax out rage. They Call it the  Here s what it Means if the president who s paid $200.000 and your Bachelor governor with no income except an $85.000 salary win $1.000 each in the lot Tery the president must pay $280 in tax on that additional income and the governor must pay $330. To House speaker Thomas s. Foley. A Wash. The Bubble. Is a distortion it is totally Topsy Turvy up Side Down of everything that we have Ever considered fair reasonable Lav  americans have grown up with the notion that the More you make the greater portion of each Dollar you pay in lax. The stripped Down tax rate Structure enacted in 1986 conflicts with that tradition. Draw a bar graph of traditional income tax rates and you see a series of Stair Steps leading upward. But the new Law Lias three Steps up and then for the really High income earners one step Down. That step Down is the Bubble which benefits the nation s richest 600,000 couples and individuals. The quirk is at the heart of a steaming tax Battle Between congressional democrats and president Bush. As part of their plan to kill Bush s proposed Cut in the capital gains lax Foley and fellow democratic leaders in inc House Are trying to Bur the  eliminating it would take More taxes from the wealth Iest and use the Money to allow deductible individual retirement accounts for All workers and to Cut the budget deficit. Here s what the Bubble is All about the tax Law now has three tax Rales 15 percent 28 percent and 33 percent. Every taxpayer pays the lowest Rale. For about 80 percent of americans it is the Only rate they pay every taxable Dollar the earn is taxed at a rate of 15 percent. For a single person the Bottom rate applies to All taxable income what is left after deductions and Persona exemptions Are subtracted up to sis.55u. For a couple filing a joint return the 15 percent bracket covers taxable income up to $30.950. Suppose Jill lunch bucket has taxable income of is too and gets a $1.000 pay raise. Step 2 of the rate the Bubble. Is a distortion it is totally Topsy Turvy upside Down of everything that we have Ever considered fair reasonable tax  House speaker Thomas 5. Foley Structure comes into play. The first $18.550 is taxed at 15 percent and inc additional s450 is taxed at 2x per cent. Jill has moved up into the 28 percent marginal tax bracket meaning that any additional income another pay raise winning a football Pool or interest on a new savings account will be la cd at 28 percent. Suppose she s elected football commissioner and gets a $70,000 raise. Assuming she has no extra deductions thai pushes her taxable income to $89,000 and produces this tax picture $18,550 is taxed at 15 percent resulting in $2.7x2.5 1 in tax. The next $26.35 1 is taxed at 28 percent or $7.378. The remaining $44.90 1 is taxed at 33 percent or 514.553. That Means a total lax of $24.713.5 1. The Bubble does nol affect Jill because her taxable income is under the $93.130 level at which it comes in open. But consider Jack big hucks who also is single makes $500.000 a year and has taxable income of $400.000. He has to figure his taxes differently. That is because congressional lax writers in crafting the 1986 overhaul decreed that singles with taxable incomes above $93,130 and couples above $155.320 with no dependents pay a Flat 28 percent rate on every Penny of taxable income. Also the very Rich gel no tax Benefit from personal exemptions. So. For Jack the entire $400.000 is taxed at 28 percent Lor a lax of 112,000. Losing the tax saving from his $2.000 personal exemption adds $560 28 percent of $2.000 10 his tax Bill. That gives Jack a lax liability of a 12.560. The democrats want to remove that Bubble prevent the 33 percent Rale from dropping Back to 28 percent. They would lax All of Jack s taxable income Over $44.900 at 33 percent. That would mean $18.550 taxed at 15 percent a lax of $2,782.50. The next $26,350 taxed at 28 percent or $7.378. The remaining $355,100 taxed at 33 percent or $117.183. Jack would have a local lax Bill of $127.343.50, or $ 14,783.50 More than under present Law. Quayle has message of teamwork Tokyo a vice president Dan Quayle is stressing partnership wit Japan during official talks in Toko this week. . Officials said sunday. Quayle was expected to Tell prime minister Toshiki Kaifu and other Japa Nese leaders in meetings scheduled for monday and tuesday that the two nations should team up on a wide Range of issues including space exploration anti drug efforts third world debt and promoting democracy a senior administration official said. The vice president believes too much of the  relationship has focused almost myopic ally on the Trade Issue reporters were told by a . Offi Cial who requested anonymity. While resolving Trade problems is important there is much More to the relationship than arguments Over economic  the source said. Quayle was expected to announce a new agreement with Japan on space cooperation during his visit monday to the Tsukuda space Center East of Tokyo the officials said. The administration official said Quayle had found Strong support for the . Mili tary presence in Asia during his visit to South Korea. Approximately 43,000 american troops arc based there and More than 50,000 . Troops Are stationed in Japan. The sense we be gotten from both the koreans and the japanese is the stability of defense relations in both cases the official said. On saturday Quayle called on the soviet government to return several islands that Are claimed by Japan but have been occupied by the soviets since the end of world War ii. The vice president also criticized Japan s leading opposition party the socialists for their Call to modify a Mutual Security treaty with the United states. Seizing protest marchers police in Pretoria South Africa direct protesters into a police Van saturday after the government banned a March to the Union buildings the government s administrate u Headquarters authorities said the anti apartheid March organized by 30 women s groups was banned because organisers did not ask for official permission. But the organizers said the step had been taken