- The Washington Times - Saturday, June 22, 2002

House Republicans yesterday pushed through a bill that permanently increases the limit on tax-free contributions to pensions after defeating Democratic efforts to turn the debate into a referendum on Enron and corporations' efforts to escape corporate income taxes.

Yesterday's vote on the pension benefits of President Bush's tax package which last year cut income-tax rates across the board was the latest attempt by Republicans to showcase their efforts as the November general elections approach.

They also have carved out for separate action several provisions of that package, including tax cuts for married couples and permanent estate-tax repeal.

House Majority Leader Dick Armey, Texas Republican, said yesterday's bill may be the last attempt to extend past the 2010 sunset provision parts of Mr. Bush's package.

Last year's tax law streamlined rules for establishing, becoming vested in and transferring pensions, and raised the limits individuals could contribute, tax-exempt, to their individual retirement accounts and 401(k)-type plans. The IRA limit is going from $2,000 now to $5,000 in 2008, and would be indexed for inflation.

Maximum tax-exempt contributions to a 401(k) would rise from $10,000 to $15,000 by 2006.

The bill passed 308-70, with 115 Democrats and one independent joining the Republicans in support, and one independent joining 69 Democrats in opposition.

The Democrats' substitute bill, with provisions designed to make "golden parachute" retirement packages for top executives less attractive for companies to fund, failed on a nearly party-line vote, 182-204. They also failed to amend the bill with new punitive capital-gains rules for executives of corporations that move overseas.

"There's a lot of harping, whining and moaning this bill doesn't address that. This bill wasn't written for that purpose," said Mr. Armey. "It's just that we haven't squeezed that last little mean-spirited, nasty little drop of political diatribe from the subject. Well, we should have gotten it today."

Most Democrats supported that effort. But they wanted the bill to include language punishing executives from companies that move overseas, though the move is mostly just in name, to avoid paying federal taxes.

Minority Leader Richard A. Gephardt called that the "unpatriotic Bermuda loophole" and urged the House to vote for Democratic alternatives that would force executives of companies that shift overseas to pay capital gains on their stock options, the same as executives of U.S.-based companies.

"Today, we have another chance, a good chance to do the right thing for capitalism, for well-run corporations, for Main Street economic America. We have a responsibility to help restore confidence in our system and in our economy," Mr. Gephardt, Missouri Democrat, said.

But Republicans said they are working on a bill to address companies that move overseas.

"In a couple of weeks, you're going to get a real solution from the Ways and Means Committee," said committee Chairman Bill Thomas, California Republican, who called Democrats' attempt to force a vote on the issue yesterday a "political 'dirty bomb.'"

Many provisions from last year's tax-cut package expire at the end of 2010 because of budget rules that require 60 votes in the Senate to overcome an automatic 10-year sunset. Only 58 senators voted for last year's package.

Since then, the House has spent part of this year debating and passing six bills making provisions in the package permanent: a measure encompassing last year's entire package; exempting Holocaust payments from taxes; doubling the adoption tax credit; repealing the estate tax; adjusting for the marriage penalty by giving married couples a tax cut; and yesterday's bill.

But the measures don't appear likely to go any further. The Senate, in a 54-44 vote earlier this month, again failed to muster the necessary 60 votes, and Majority Leader Tom Daschle, South Dakota Democrat, has said he doesn't see a need to bring up other parts of the package right now.


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