Comparing Tax Wish Lists

The Treasury trial balloon, released last week, is not the only major tax-reform proposal afloat in Washington. Rival versions were introduced in Congress last year. The Republican plan, sponsored by Congressman Jack Kemp of New York and Senator Robert Kasten of Wisconsin, comes closest to the idea of a "flat tax," a single rate for all taxpayers. The Democratic alternative, sponsored by Senator Bill Bradley of New Jersey and Congressmen Richard Gephardt of Missouri, offers graduated but lower tax rates. Below, the main features affecting individual taxpayers are compared with current tax law:

Category Current Tax Law Treasury Plan Kemp-Kasten Bradley-Gephardt Individual Single 15 brackets from 0% up to $2,800 of 0% up to $2,700 0% up to $3,000 Rates 11% to 50% AGI (adjusted 25% flat rate, with 14% up to $25,000 gross income) 20% exclusion for 26%up to $37,500 15% up to $19,300 earned income 30% over $37,500 25% up to $38,100 35% over $38,100

Married 14 brackets from 0% up to $3, 800 0% up to $3,500 0% up to $6,000 11% to 50% 15% up to $31,800 25% flat rate 14% up to $40,000 25% up to $63,800 26% up to $65,000 35% over $63,800 30% over $65,000

Mortgage Interest Deductible Deductible for principal Deductible Deductible^1 residences only

Other Personal Deductible Deductible up to Not deductible except Deductible only for Interest $5,000 for education loans investment incom

Property Taxes Deductible Not deductible Deductible Deductible

State and Local Deductible Not deductible Not deductible Deductible Income Taxes

Charitable Deductible Deductible above Deductible Deductible Contributions 2 % of AGI

Medical Expenses Deductible above Deductible above Deductible above Deductible above 5% of AGI 5% of AGI 10% of AGI 10% of AGI Indexing^2 Yes Yes Yes No

Individual Retirement $2,000 tax $2,500 tax $2,000 tax $2,000 tax Accounts deductible^3 deductible deductible deductible

Corporate Pensions Tax deferred4 Tax deferred Tax deferred Tax deferred

Social Security Not taxed for lower Same as current law Taxed at lower Same as current law Benefits and middle incomes rates

Capital 60% excluded Taxed as 19% excluded for 10 Taxed as Gains from income ordinary income years, then taxed as ordinary income ordinary income Capital Gains on Owner-Yes Yes Yes Yes Occupied Housing5

Child-Care Costs Tax credit up to Deductible up to No credit or Deductible up to $2,400(1 child) $2,400(1 child) deduction $2,400(1 child) $4,800 (2 or more) $4,800 (2 or more) $4,800 (2 or more)

Health Insurance Paid Not taxed Not taxed up to Not taxed Taxed For by Employer $70 a month (single) $175 a month (family) Life Insurance Paid Not taxed Taxed Not taxed Taxed For by Employer

Business-Related Deductible Meals deductible up to Deductible Deductible Entertainment $ 50 a day

Business Deductible Deductible up to twice Deductible Deductible Travel the travel per diem ($100) for federal employees

^1Under Bradley-Gephardt, ^2Adjusting tax ^3Annual contribution to 4Corporate contribution 5Profit on sale of home is all deductions are at a brackets to inflation IRA up to $2,000 is not to pension fund is not not taxed as income if maximum rate of 14% counted as taxable income counted as taxable in-used to buy new home come until retirement within 18 months