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US tax-reform bill moves toward hazards of conference committee

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The historic tax-reform bill has nearly completed its sweep through the United States Senate and could be approved as early as today. But trouble may be in store for the House-Senate conference coming up on the tax bill, where a compromise is supposed to be reached between the Senate measure and a substantially different House version passed last December.

By narrowly deciding to reject an amendment to retain the deductibility of individual retirement account (IRA) contributions for all taxpayers, the Senate positioned itself to reject any other major changes to the tax proposal on the floor. That approach is supposed to speed passage of the bill. More important, however, it is supposed to ensure that the politically popular low income-tax rates the bill proposes are not raised to pay for restoration of some deductions that are in the present tax code.

Yet the Senate has voted against changes in the bill on the floor with the expectation that they will be reconsidered in the House-Senate conference. That not only raises the possibility of a lengthy conference, but the near-certainty that the rates senators have sought to protect on the floor will be altered, perhaps significantly, in the conference.

The Senate's approach has already irritated the House's chief tax writer, Ways and Means Committee chairman Dan Rostenkowski (D) of Illinois, who maintained a diplomatic silence during the Senate's deliberations. In a letter to Sen. Alan J. Dixon (D) of Illinois, Representative Rostenkowski said that the result of the Senate decision to ``table,'' and thus kill, the IRA provision would ultimately mean a raising of the rates proposed by the Senate bill: 33 percent for businesses, 27 and 15 percent for individuals.

``It is unrealistic, in my view, to expect the conference to patch up what the Senate itself seems unwilling to face,'' Mr. Rostenkowski said.

With the IRA hurdle cleared, senators now seem willing to put a raft of major changes on hold until the conference. Nonbinding ``sense-of-the-Senate'' resolutions have become a popular way for senators to go on record as favoring an amendment to the tax bill without committing themselves to finding a way to pay for it. Thus, Wednesday's 51-to-48 vote to kill the IRA amendment came after the Senate voted, 96 to 4, for a resolution that urged conferees to adopt ``the maximum possible tax benefits'' for the retirement accounts.

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