The Budget: A Look At The Spending Side (7/30/97)
Congress To Vote On Budget, Tax Bills (7/30/97)
Weighing In On The Budget Deal (7/30/97)
Clinton, GOP Leaders Hail Budget Pact (7/29/97)
Explaining The Budget (7/29/97)
How The Deal Affects You: A look at the agreement's tax breaks for families, capital gains and education. (7/29/97)
GOP, White House Say Budget A Done Deal (7/28/97)
In Focus: The Balanced Budget
How The Budget Deal Could Affect You
Agreement includes education and child care tax credits, higher cigarette taxes
By Thomas H. Moore/AllPolitics
WASHINGTON (July 28) -- The balanced budget deal, if it becomes law, includes provisions that would affect nearly every American's pocketbook, with a net $90 billion in tax cuts. Moreover, negotiators say it would balance the federal budget by 2002. That's the first time that's happened since 1960s, and could mean lower interest rates that would cut the cost of consumer borrowing.
Keep in mind the difference between a tax deduction and a tax credit. A deduction, such as the charity deduction, allows taxpayers to reduce the amount of income on which they have to pay taxes. Someone making $30,000 per year who donates $2,000 to charity only has to pay taxes on $28,000 of income. The value of the deduction depends on what one's tax rate is.
Tax credits, such as those being discussed for children and education, are much more valuable; they are lopped right off one's tax bill. Someone who owes, for example, $8,000 in taxes and has three children would owe only $6,800 in taxes if the $400-per-child credit becomes law.
The plan also calls for $24 billion in new spending on children's health over five years. It saves $115 billion from Medicare over five years, primarily squeezing the money out of providers but also increasing some premiums. It calls for $14.4 billion in welfare spending that would reinstate benefits to disabled legal immigrants.
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