By Sen. Max Baucus
Five months ago, I set out to write a truly bipartisan bill to bring tax relief to all Montanans.
I approached my Republican colleague, Senator Charles Grassley of Iowa, chairman of the Senate Finance Committee, and we agreed to craft the framework for a strong tax-cut package. We decided that our plan would differ significantly from the Administration and House plans, mainly to shift more of the benefits to low- and middle-income people and reflect many of the priorities important to both of our rural states.
I knew that I would take some heat for my position. But I also knew that I had to stand up for a bill that would be good for the people of Montana. I have 900,000 bosses, and it's my job to represent their needs and concerns.
The Baucus-Grassley tax cut bill, which Congress passed May 26 and sent to the president, is more fair and equitable to Montana than the legislation that was passed by the House. The strength and bipartisan nature of our bill allowed us to succeed when Senate and House leaders, including myself, met to iron out differences between bills and ensure that provisions important to Montana and America stayed intact.
In the end, neither of us got everything we wanted, which proved that we had a deal that was the essence of compromise a deal that would help all Montanans in a way similar legislation never could.
The improvements in our bill were clear:
We included provisions to allow millions of low-income folks to, for the first time, claim a portion of the child tax credit.
We boosted contribution limits for savings and retirement plans, including IRAs and 401-(k)-type plans.
We provided college tuition deductions of up to $4,000 per year to make it easier for families to send kids to college.
And we created a new, immediate 10-percent income tax rate for the first portion of every taxpayer's income, providing more relief to low-income taxpayers.
The Baucus-Grassley bill also included the core components of President Bush's original plan, including across-the-board income tax cuts and eventual repeal of the estate tax.
For Montana, passage of the bill means something real. It means that more than 34,000 Montana families with an estimated 68,000 children will receive a larger tax cut under the Grassley-Baucus bill than they would have under the Administration's plan. We also included an immediate economic stimulus that will provide tax relief this year by giving a rebate check of up to $300 per individual, $500 for heads of households, and $600 per couple. That will put more money into Montanans' pockets and boost the state's economy. And we provided significant tax relief from the marriage penalty paid by thousands of two-income couples in Montana.
On May 22, our bill passed the Senate by a wide bipartisan majority a testament to the compromise we had achieved. And an even greater testament was the success that was achieved in the House and Senate Conference Committee. Late Friday night, May 25, we reached a final agreement on a bill that both the full House and Senate passed easily on Saturday, May 26.
The final bill stayed very close to the Baucus-Grassley agreement. It will still provide $1.35 trillion in tax relief, although over 10 years rather than 11 years. The child tax credit will still be doubled and will provide relief to hundreds of thousands of middle- and lower-income Americans.
The marriage penalty will be reduced and the estate tax will be completely eliminated at the end of 10 years. One of the main differences between the Baucus-Grassley Senate bill and the final bill was the cut in the top tax rate. My Senate bill reduced the tax income tax rate from 39.6 percent to 36 percent; the final bill reduced the rate to 35 percent. This provision was agreed to only after we were assured that the child tax credits and other provisions important to middle- and lower-income people and rural America were included.
Anyone who knows me, knows that I love Montana and that protecting its interests is why I am proud to serve as your senator. I believe that a large tax cut is necessary and is the best policy for our state's and country's economic future. I am proud of the final bill that we passed on May 26. Proud that it increases the progressive nature of our tax law, and proud that it was accomplished with bipartisan support.
I have always said that perfection shouldn't be the enemy of the good. And the tax bill we passed is very good. The process was the true definition of compromise. By working together and leaving partisan politics out of our discussions, we passed a strong bill that will provide immediate tax relief to Montanans. That's what I was fighting for all along: Reducing the tax burden, boosting our economy, and putting more money in Montanans' pockets.