- The Washington Times - Sunday, May 4, 2003

Two Cabinet secretaries yesterday said House Republicans’ proposal to reduce but not eliminate the double taxation of dividends is a move in the right direction.Treasury Secretary John W. Snow and Commerce Secretary Donald L. Evans, in separate appearances with House and Senate Republicans at the Capitol yesterday, said while the president is still fighting for full elimination of the double tax on dividends, the House proposal to reduce the tax by treating dividend income like capital gains has promise.”It’s a big step in the right direction,” Mr. Snow told reporters after meeting with the House Republican Policy Committee yesterday morning.House aides said that though the administration’s remarks aren’t an endorsement, they are considered a sign of acceptance.House Ways and Means Committee Chairman Bill Thomas, California Republican, is proposing a $550 billion tax package in which personal income from dividends would be treated like capital gains. The 20 percent tax rate on capital gains would drop to 15 percent, while the 10 percent rate would fall to 5 percent.The plan has the endorsement of House Republican leaders, who met with Mr. Thomas yesterday evening.President Bush initially had proposed a $726 billion package that ended the tax on individuals’ income from corporate dividends and accelerated other already-planned tax cuts. The House includes elements of those accelerated cuts in their new package. Still, most Democrats remain opposed to any parts of the president’s plan, including the new House version.Rep. Charles B. Rangel of New York, ranking member of the Ways and Means Committee, said capital-gains cuts won’t benefit middle-class families since “it’s hard to find any middle-income family that has any capital gains these days.”“I did not like the president’s tax plan because it was unfair and did not stimulate the economy,” he said. “By reducing the relief for families, the House Republicans have actually made it worse.”House Minority Leader Nancy Pelosi, California Democrat, said Democrats will offer an alternative proposal that will direct aid to states to cover their own fiscal shortfalls and include a much smaller tax cut than Republicans have proposed. She said it would create 1 million new jobs this year.The bill will be voted on in committee next week and could come to the House floor next Friday.While the House strategy firmed up yesterday, the Senate was much less clear. Senators are trying to craft a bill at $350 billion over 10 years, though that amount could grow if they find offsetting spending cuts or revenue increases.Republican senators kept repeating that they were considering many options, and though they said they wouldn’t negotiate the bill in public, one option being floated is to entirely — but temporarily — eliminate the double taxation of dividends. That would reduce the overall cost.Still, it got a cool reception from Sen. Olympia J. Snowe, Maine Republican and one of those who leaders hope will support an eventual bill. She called it a gimmick, and said, “I rule out any gimmicks.”The Bush administration, though, seems pleased with the progress on the issue. Mr. Snow and Mr. Evans both stressed that all of the plans being floated in the Senate and House include the major elements of the president’s initial proposal.


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