WASHINGTON, May 21 (UPI) -- The House and Senate Republican leadership Wednesday announced an agreement on the final form of a $383 billion tax cut package. However, it remains unclear if GOP and Democrat centrists will accept the terms of the tax cut, which exceed levels key moderates said were the most they would support.
The current version lowers capital gains and dividend taxes to either 15 percent or 5 percent depending on the income of the taxpayer and would have an overall tax reduction effect of $350 billion. The deal also includes $33 billion in new spending, brining the package size to $383 billion.
The original Senate package passed in a tie vote, broken by the vice president, and several key centrists, including Republican Sen. George Voinovich of Ohio and Democrats Ben Nelson of Nebraska and Evan Bayh of Indiana, expressed initial reservation about voting for a package larger than $350 billion.
The plan reduces wage by accelerating previously planned cuts on income tax rates. It cuts taxes for married couples and gives parents a $1,000 per child tax credit until 2005.
President Bush had pitched the tax cut package as a way to stimulate investment and help move the nation's economy out of a borderline recession. The plan pushes business investment by allowing small businesses to write off up to $100,000 of equipment investments through 2004, and allows them to depreciate more of their assets through 2004.
Bush had originally proposed a tax cut of more than $725 billion, which the House approved in a partisan vote, but the more closely divided Senate reduced the proposal by more than 50 percent.
These efforts, though supported by Democrats, were actually led by key Republicans concerned about the nation's ever-widening budget deficits, which are expected to triple in FY 2003 even before the tax cut takes effect.
One key figure in the effort to pare back the proposal is Senate Finance Committee Chairman Charles Grassley, R-Iowa, who rejected the larger figure, but eventually negotiated and approved the compromise with the House.