The Georgia Democrat and Sen. Phil Gramm, R-Texas, on Monday said they will co-sponsor President George W. Bush’s $1.3 trillion, 10-year tax-cut plan.
A family of four with a com-bined income of $50,000 would get a tax cut of more than $1,900 from the proposal.
The proposal would replace the current federal tax brack-ets, which now run from 15 percent to 39.6 percent, with four brackets: 10, 15, 25 and 33 percent, Miller said in a tele-phone interview from Washing-ton.
The new 10 percent bracket would provide large percentage tax cuts for Americans with small taxable incomes.
“Any time I look at a tax cut, I always apply it to the family I grew up in: a single parent with two children,” Miller said. “Under the current tax rate, that single parent begins paying taxes when she earns $21,300. Under this plan, she would not become a taxpayer until her earnings reach $31,300.”
A family of four earning $75,000 a year would get a 25 percent tax cut, returning $2,500 in taxes to the family, he said.
“The largest percentage of cuts would go to those Ameri-cans who earn the least,” he said. “Under this proposal, 6 million families will no longer pay any federal income taxes at all. That’s one out of five fami-lies with children.”
Bush has called for $1.3 tril-lion in tax reductions through 2010, centered on an across-the-board cut in rates.
His plan also would eliminate the estate tax; address the “marriage penalty,” a wrinkle in the tax code in which some couples pay more than they would as single filers; and make the business research and de-velopment credit permanent.
Miller said the tax cuts would be paid for by the current budget surplus.
“Right now, our taxes have never been higher. Right now, our surplus has never been greater,” he said. “To me it’s just common sense — you deal with the first by using the sec-ond.”
By reducing the highest tax bracket to 33 percent from 39.6 percent and reducing the low-est rate to 10 percent from 15 percent, the entire tax code becomes more progressive, Miller said.
Miller, the first Senate Demo-crat to endorse the Bush pack-age, said he agrees with Bush that taxpayers know better than Washington lawmakers how to spend their own money. He said he has been shocked, since becoming a senator last year upon the death of Republican Sen. Paul Coverdell, over how Congress was “slurping up the surplus” with new spending.
While many Democrats say there is a need for some tax relief, there is still widespread opposition to the Bush plan’s size and composition.
It’s “much too large” and would be bad for the economy, Sen. Joseph Lieberman, D-Conn., said Sunday on ABC.
Democrats said the proposal snubs fiscal discipline and does not do enough to pay down the national debt, and they warned that Bush faces difficult days in Congress if he ignores their priorities.
“I think we will be surprised by the number of Democrats that ultimately support it,” Miller said.
Actual consideration of the tax package won’t begin until Bush submits his budget to Congress next month, and the Constitution requires tax bills to originate in the House, so the legislative process could take months.
Congressional Republicans and Bush administration offi-cials have been talking about making a tax cut retroactive or speeding up the implementa-tion of a possible package. Bush’s proposal was designed so that most of the revenue loss — meaning the money actually going into Americans’ pockets — was delayed several years.
“The best chance he has to make an impact is to push through some kind of a retroac-tive tax cut,” said Christopher Wiegand, economist at Salo-mon, Smith Barney.
If data continue to show “the economy going down rapidly, the Democratic leaders may agree to a larger tax cut,” he said.
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