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U.S. House Republicans unveil college savings plan

July 8, 1999
Web posted at: 6:03 p.m. EDT (2203 GMT)

WASHINGTON (AllPolitics, July 8) - Parents and students would receive a tax break intended to help them pay for college as part of a $800 - $900 billion Republican plan, said top Republicans in the House Thursday.

"Although the federal government has a limited role in the education of our schoolchildren, we should work within that role to lighten the education bite whenever possible," said the author of the plan, House Ways and Means Committee Chairman Bill Archer (R-Texas) in a statement. "That means helping students and parents save for college."

Archer pointed out that soaring tuition prices at public and private colleges necessitate the proposed tax breaks.

In the last two decades public four-year universities have increased tuition on average by 390 percent, from $642 to $3,151 per year. Tuition at private universities has jumped 440 percent from $2,881 to $15,581 per year, according to the National Commission on the Cost of Higher Education.

Current law allows only public universities to offer prepaid tuition plans to prospective students. The Republican plan, though, would not only allow private universities to set up prepaid tuition plans to prospective students but also make earnings tax exempt.

Another initiative would increase contribution limits for the so-called Education Savings Accounts from $500 to $2,000 per year, and allow their use for pre-college schooling -- a measure that could benefit as many as 14 million families.

Archer said he also intends to include an initiative to boost lagging public school construction by easing tax curbs on the issuance of bonds by states and localities.

The three education initiatives announced by Archer would cost the federal government between $7.5 billion and $10 billion. They would be wrapped into broader legislation, expected to cut taxes by $800 billion to $900 billion over 10 years.

Democrats and the White House oppose the package on the grounds that it caters to the rich and to corporate interests at the expense of the poor. President Bill Clinton is all but certain to veto the bill unless Republicans scale it back dramatically.

The White House has already invited congressional leaders to meet with Clinton next week to discuss their legislative priorities. Republicans were expected to press for major tax cuts.

Another part of the House Republican package, announced Wednesday, includes a measure to reduce the top capital gains tax rate on investment profits to 15 percent from 20 percent, effective July 1, 1999.

The Republican plan would also include a new tax exemption for people who provide long-term care to elderly relatives at home, as well as give taxpayers a 100 percent deduction on insurance premiums.

In the coming days, Archer is expected to unveil a far more costly and controversial initiative intended to ease income taxes and relieve the so-called "marriage penalty" paid by millions of two-income couples.

The Ways and Means Committee has to finalize Archer's tax plan by July 16, clearing the way for a vote by the full House before Congress' August recess.


RELATED STORIES

House GOP proposes new capital gains cut (7-7-99)

GOP presidential hopefuls compete on tax cut plans (6-24-99)

Republicans use Tax Freedom Day to call for tax cut (5-11-99)

Democrats say Republican budget sacrifices Medicare for tax cuts (3-18-99)


RELATED SITES

Rep. Bill Archer's Web Site

White House



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Thursday, July 8, 1999

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