Congresswoman Carolyn McCarthy stated at her recent Editorial Board Meeting that if the voters in the 4th C.D. are willing, she'll continue to work for their interests in Congress until at least 2002. She added that in 2002 she'll take time to think about her goals and evaluate her options, but she noted that she has no plans to set up camp in the Oval Office. She does wish to continue her "commonsense approach" to problem-solving in government, and with that in mind, she discussed her current tax proposal.

McCarthy has termed her tax package her "Commonsense Family Tax Relief Act." The plan calls for a $310 billion tax cut, which is larger than that proposed in President Clinton's tax plan, and smaller than that of the Republican plan, leaving $700 billion dedicated to paying down the national debt and funding Social Security and Medicare. In response to questions about her bi-partisan voting record, she noted, "Yes, on economic issues I do tend to vote Republican. My job is to protect the incomes of my district. Here $70,000 is like $45,000 in the midwest. People need a break." She noted that her plan is a middle ground between Democratic and Republican plans.

The McCarthy bill calls for tax relief in the form of marriage penalty relief, a dependent care tax credit increase, credit for employer-provided child care services, capital gains exclusion, and preventing the alternative minimum tax (AMT) from stopping middle income families from taking advantage of child and education tax credits.

The marriage penalty relief is designed to "put married couples on equal footing with unmarried couples" in terms of their tax deductions, according to McCarthy. She explained, "For 1998, the standard deduction was $4,250 for singles (totaling $8,500 for an unmarried couple) compared to $7,100 for spouses who filed jointly. This resulted in married couples paying tax on an additional $1,400 in income they would not have to pay if they were two single people filing. This provision would increase the standard deduction for married taxpayers to twice that of a single filer ($8,500 in 1998) putting them on equal footing with unmarried couples." According to McCarthy this will result in tax relief of $27.6 billion over five years and $61.4 billion over ten years.

The bill calls for an increase of the Dependent Care Tax Credit (DCTC) for all families with an income of less than $60,000. Families with less than a $30,000 income would get a 50 percent credit and families earning more would receive smaller percentages. Families with children under the age of 1 could claim at least $1,500 annually regardless of actual expenditures and a maximum of $750 would go to families with young children. McCarthy projects the five-year relief figure to be $5 billion and the ten-year figure to be $12.45 billion.

McCarthy also noted, "My bill allows employers a credit for a portion of the expenses incurred in providing dependent care services to employees." She predicts a $0.90 billion tax relief total for five years and a $1.80 billion relief over ten. She explained the Capital Gains Exclusion by noting, "My bill puts the maximum rate for individuals from 20 percent to 15 percent on net capital gains from property held more than one year. For taxpayers in the 15 percent income bracket, the bill reduces the rate from 10 percent to 7.5 percent. It also repeals the 8 percent and 18 percent rates on certain gains from property held more than five years." She expects a $21.92 billion actual tax relief over five years and a $51.65 billion relief over ten years.

The actual tax relief, according to McCarthy, on her plans to protect education and child credits from the AMT amount to $46.6 billion over five years and $32.3 over ten years. She noted that the HOPE college credit, Lifetime Learning Credit, $500 Child Credit, and the Child Dependent Care Tax credit would not be subject to the AMT for middle-income families with her bill.

The bill also provides for a research and development tax credit and an estate tax elimination for family-owned business -- both geared to provide billions in relief for American businesses. The R&D credit expired in June of this year and this bill would make it permanent. Within the bill there are also provisions for: a student loan deduction; an information technology training tax credit; an increased IRA contribution; an increased Social Security earnings limit; an increase in the annual limitation on state authority to allocate Low Income Housing Tax Credits and index the cap to inflation; an increase in the deduction for health care insurance costs of self-employed individuals to 100 percent; and a long-term care insurance deduction.

According to McCarthy, her bill offers a total package tax relief of $113.76 billion over five years and $307.80 billion over ten years.

McCarthy noted that she saw that the bills supported by the majority in the House and Senate, which President Clinton has said he will veto, do not take all factors into account and were designed to present large tax relief to the voters, without accounting for all of the government's expenses. "We're not going to be able to meet the spendings put out there for 2001 in my mind" McCarthy explained. "We can't meet the needs of this country without raising the caps. No one wants to take the blame. With things like health care needs for seniors and veterans, we have to provide for our people. We have to be realistic," she added.

"My main focus is to reduce the National Debt. We're paying $4 and a half billion a year on interest alone. We've actually pulled our belts in, but there's a lot of stuff in the budget -- things that get added and you have to go through every bit to catch them" she said. "There's a provision for a huge amount of money to be spent on a study of chicken manure. There's stuff in there we haven't even found yet, and it's expected to pass, but I think my bill bridges the gap between the parties and the bills the president will veto and the bills he'd like to see."

With the added elements in the bills and attempting to watch for them she noted, "We get the bills in the morning and have to vote in the afternoon sometimes, or they put the bills up as suspension bills and they're up at 2:30 in the morning. It's nuts." She added, "I'm an extremely organized person, so for me to see how things get done, I'm surprised they do get done, but they do. If I had my way, though, we'd get all the information for each bill three to four days before a vote."

(This was the second installment in coverage of McCarthy's proposals and projects in Congress. Look for more on McCarthy in next week's issue.)