Tax Cut Passes Congress

The 10-year, tax-cut package now heads for President Bush's desk after five months of controversy, with Mr. Bush insisting the measure is needed to boost the sagging U.S. economy and Democrats warning it will create an enormous federal deficit.

The struggle ended when the Vice President, presiding as President of the Senate, announced, "The Senate being evenly divided, the vice president votes in the affirmative," "Most unemployed Americans don't want another unemployment check. They want a payroll check and a job," House Speaker Dennis Hastert (R-Ill) said. Noting that the President had wanted a tax cut of $726 billion - double what congress approved, Hastert said "This bill doesn't go far enough, but it is a strong start."

Taxpayers will see the result of the tax cut in their paychecks this summer. The bill provides for rebate checks to parents of $400 per child, and bigger for to workers. The measure also provides $20 billion in aid to financially troubled states over the next two years.

Democrats warned the tax cut, and the cut passed last year, will saddle future generations of Americans with a huge debt.

"This is no victory for people who work every day because eventually this tax giveaway to the wealthy will have to be paid for," said the ranking Democrat on the tax-writing House Ways and Means Committee, Rep. Charles Rangel (D-NY) said. "You better believe that when the tab comes, it's the working people of this country who will be stuck with it."

The rate reduction is retroactive to Jan. 1, and employers will reduce withholdings by an amount sufficient to also cover the first half of the year. Employees, however will also see their paychecks get a little lower next year when companies readjust their withholding tables. The maximum income tax rate drops from 38.6 percent to 35 percent, while other rates drop from 35 percent to 32 percent, from 30 percent to 28 percent and from 27 percent to 25 percent.