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U.S. House approves marriage tax cut

WASHINGTON - The House overwhelmingly approved a $400 billion tax cut for married couples Thursday as President Bush sought to build momentum for his $1.6 trillion tax package, which he said would provide "long-lasting" relief.

The bill passed on a vote of 282-144 with 64 Democrats joining the Republican majority to pass the measure..

It would ease the so-called marriage penalty by raising the standard deduction for couples starting next year and phasing in an expansion of the 15 percent tax bracket for married couples who itemize their returns. It also would also phase in Bush's proposal to raise the $500 child tax credit to $1,000 by 2006.

The marriage tax bill is the second portion of Bush's plan taken up by the House. The centerpiece of his plan, a $958 billion 10-year across-the-board cut in income tax rates, passed earlier this month. The taxwriting House Ways and Means Committee on Thursday was expected to vote on the next installment, a plan to phase out estate taxes by 2011.

The House passed the marriage tax bill as pressure has been building for a tax cut that would pump more money into the slowing economy this year. Much of the benefits of Bush's proposal would phase in over a number of years.

House Speaker Dennis Hastert said he would resist efforts to pass a short-term bill that would return about $60 billion of this year's $96 billion surplus to taxpayers separate from long-term rate reductions and other parts of Bush's package.

"We want to do all of this stuff together," the Illinois Republican told reporters.

Ease 'marriage penalty'

Republican backers of the $400 billion, 10-year bill passed Thursday said it would ease the so-called marriage penalty for 25 million couples. Two-income couples often pay more in taxes than they would if they were single.

The bill passed on Thursday would lower taxes for couples with a stay-at-home spouse as well as for working couples. The standard deduction for married couples, currently at $7,600, would rise to double that allowed for individual filers, currently at $4,550.

The Republican-controlled House passed the measure after rejecting a more modest Democratic alternative that would reduce the current 15 percent tax bracket to 12 percent for the first $20,000 earned by a couple and $10,000 by an individual. For couples who do not itemize returns, it would raise the standard deduction to double that of individuals.

Democrats called the Republican-backed bill "excessive" and when coupled with other tax cuts proposed by Bush would use up most of the projected budget surpluses, leaving little room for other spending priorities including efforts to bolster the Social Security retirement system and the Medicare health care program for the elderly.

"By providing excessive tax relief, the Republican party is denying the looming problems that results from the retirement of baby boomers in just a few years," said Rep. Richard Neal, a Massachusetts Democrat who sits on the taxwriting House Ways and means Committee.

Bush seeks momentum for tax cut

As the tax cut measures advanced in the House, Bush has been working to build public support and momentum for his package and to fend off efforts by Senate Democrats to focus efforts on a $60 billion tax rebate this year coupled with a cut in the lowest rate bracket.

"I've been calling for immediate tax relief," Bush said Thursday at a White House news conference.

"I think it makes sense to do so," he added. "But we've got to have long-term relief as well. Part of building confidence in our economy is not only to give the consumers a boost, but to have a plan that reduces rates for the long-term, so that people who make investments—small business owners, the entrepreneurs—will have certainty that the cash flows of the future will be enhanced so they can expand their job base and make new capital purchases."

He said there was "ample" room in the budget for "meaningful, real, long-lasting tax relief."