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                         Background on Chairman Archer's Tax Plan
                                                   June 10, 1997

  The Clinton Administration's goal is to increase the amount of tax relief going into the pockets of working
 families. Chairman Archer's plan strays from that goaL It provides too little tax relieffor working
 families in order to provide unnecessary tax cuts to those who least need them:

 Completely Denies the Child Tax Credit to 4 Million Working Families. Under the Archer plan, the child
 tax credit is figured only after the earned income tax credit is taken against a family's tax bill. The Center on
 Budget and Policy Priorities has estimated that this will deny the credit to 4 million families. For example: A
 family of four with two children and $25,000 of income would receive no child tax relief under the Archer
 plan. Under the President's plan, this family would get $1,000 -- just as much as a family earning twice
 that much. The President's overall child tax credit would provide $193 billion to working families over
 ten years -- $45 billion more than Archer's would.

 Singles Out and Penalizes 6 Million Families who Pay for Child Care and Gives them Less of a Tax Cut.
 The child tax credit is designed to help hard working families raise their children. Instead of helping
 families pay for child care, the Archer plan reduces the tax cut for 6 million families. Beginning in 2003,
 more than 6 million families who receive a tax credit for child care expenses would lose 50 cents for each
 dollar of the child tax credit. For example: A family with two working parents making $45,000 who pay
 for child care for their two children would seemingly be eligible for a $1,000 child tax credit. But under
 the Archer plan, they would also lose $480 of their child tax credit.

 Dramatically Cuts the HOPE Scholarship Tax Credit to Students Going to Community Colleges.
 While we're pleased Chairman Archer has included a version of the President's HOPE scholarship, it is
 less fair th!j.l1 the President's plan. For example: A student from a working family who goes to a
 community college with a $1,200 tuition would have his or her entire tuition paid for under the President's
 plan. Under the Archer plan, that same student would receive only $600. The Archer plan fails to
 advance the President's goal of making the first two years of college universal. Under the Archer plan, a
 student attending an expensive private school would receive the full $1,500 credit, but the student attending
 community college would be short changed.

         Over 250 college presidents -- from community colleges to public and private colleges and
         universities -- support the President's proposals. The President of the American Council of
         Education says: "The Hope tax credit is a giant step in the direction of making the first two years of
         college a universal benefit." And the American Association of State Colleges and Universities
         stated about the Archer plan on June 9th, that "instead o/improving the Administration's
         education-related tax proposals. it accomplishes just the opposite. It is more regressive and does
         nothing to expand access to higher education. "

INSTEAD OF MAXIMIZING TAX RELIEF FOR WORKING FAMILIES, THE ARCHER PLAN
PROVIDES EXTENSIVE TAX CUTS FOR CORPORATIONS AND HIGHER-INCOME PEOPLE:

Allows Profitable Corporations to Pay not a Penny in Income Taxes. In 1986, Citizens for Tax Justice
surveyed 250 of the nation's largest and most profitable corporations and found that 130, more than half, paid
no income taxes during at least one of the five years 1981-1985. During those years when they paid no
income taxes, these companies earned a combined $73 billion in pretax domestic profits. That is why there is
a corporate alternative minimum tax. The Archer plan would return us to the days when some giant
corporations didn't pay a penny in income taxes -- costing $34 billion over ten years.

Capital Gains Tax Cuts Would Explode the Deficit. On top ofa broad-based capital gains tax cut, the
Archer plan includes indexing of capital gains beginning in 2001. This proposal, which would be
enormously difficult to administer, would threaten to undo much of the progress of bringing down the deficit.
That's why the President insisted that the Republican leadership commit that the tax cut "shall not cause costs


 to explode in the outyears.
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==================== ATTACHMENT 1 ==================== ATT CREATION TIME/DATE: 0 00:00:00.00 TEXT: Unable to convert ARMS_EXT: [ATTACH.D25]MAIL43514406G.116 to ASCII, The following is a HEX DUMP: Hex-Dump Conversion Background on Chairman Archer's Tax Plan June 10, 1997 The Clinton Administration's goal is to increase the amount of tax relief going into the pockets of working families. Chairman Archer's plan strays from that goaL It provides too little tax relieffor working families in order to provide unnecessary tax cuts to those who least need them: Completely Denies the Child Tax Credit to 4 Million Working Families. Under the Archer plan, the child tax credit is figured only after the earned income tax credit is taken against a family's tax bill. The Center on Budget and Policy Priorities has estimated that this will deny the credit to 4 million families. For example: A family of four with two children and $25,000 of income would receive no child tax relief under the Archer plan. Under the President's plan, this family would get $1,000 -- just as much as a family earning twice that much. The President's overall child tax credit would provide $193 billion to working families over ten years -- $45 billion more than Archer's would. Singles Out and Penalizes 6 Million Families who Pay for Child Care and Gives them Less of a Tax Cut. The child tax credit is designed to help hard working families raise their children. Instead of helping families pay for child care, the Archer plan reduces the tax cut for 6 million families. Beginning in 2003, more than 6 million families who receive a tax credit for child care expenses would lose 50 cents for each dollar of the child tax credit. For example: A family with two working parents making $45,000 who pay for child care for their two children would seemingly be eligible for a $1,000 child tax credit. But under the Archer plan, they would also lose $480 of their child tax credit. Dramatically Cuts the HOPE Scholarship Tax Credit to Students Going to Community Colleges. While we're pleased Chairman Archer has included a version of the President's HOPE scholarship, it is less fair th!j.l1 the President's plan. For example: A student from a working family who goes to a community college with a $1,200 tuition would have his or her entire tuition paid for under the President's plan. Under the Archer plan, that same student would receive only $600. The Archer plan fails to advance the President's goal of making the first two years of college universal. Under the Archer plan, a student attending an expensive private school would receive the full $1,500 credit, but the student attending community college would be short changed. Over 250 college presidents -- from community colleges to public and private colleges and universities -- support the President's proposals. The President of the American Council of Education says: "The Hope tax credit is a giant step in the direction of making the first two years of college a universal benefit." And the American Association of State Colleges and Universities stated about the Archer plan on June 9th, that "instead o/improving the Administration's education-related tax proposals. it accomplishes just the opposite. It is more regressive and does nothing to expand access to higher education. " INSTEAD OF MAXIMIZING TAX RELIEF FOR WORKING FAMILIES, THE ARCHER PLAN PROVIDES EXTENSIVE TAX CUTS FOR CORPORATIONS AND HIGHER-INCOME PEOPLE: Allows Profitable Corporations to Pay not a Penny in Income Taxes. In 1986, Citizens for Tax Justice surveyed 250 of the nation's largest and most profitable corporations and found that 130, more than half, paid no income taxes during at least one of the five years 1981-1985. During those years when they paid no income taxes, these companies earned a combined $73 billion in pretax domestic profits. That is why there is a corporate alternative minimum tax. The Archer plan would return us to the days when some giant corporations didn't pay a penny in income taxes -- costing $34 billion over ten years. Capital Gains Tax Cuts Would Explode the Deficit. On top ofa broad-based capital gains tax cut, the Archer plan includes indexing of capital gains beginning in 2001. This proposal, which would be enormously difficult to administer, would threaten to undo much of the progress of bringing down the deficit. That's why the President insisted that the Republican leadership commit that the tax cut "shall not cause costs to explode in the outyears. Automated Records Manage~ent System Hex-Dump Conversion