Senior congressional negotiators Saturday weighed a hefty surtax on people with incomes over $300,000 a year, which aides said almost certainly will be part of any deficit-reduction tax bill.
Top tax-writers from the House and Senate met with White House Budget Director Richard G. Darman and presidential chief of staff John Sununu but indicated no agreement was likely before Sunday night."I hope they'll be able to reach a conclusion by the end of the weekend," House Speaker Thomas Foley, D-Wash., told reporters. "I've generally heard that they've been doing well."
"I think we're making progress," Sen. Lloyd Bentsen, D-Texas, chairman of the Finance Committee, said after top Democrats broke off into their own meeting and the talks ended for the day. "I think we have a reasonable chance to finish this Sunday night. But we still have some major sticking points."
But one source close to the talks acknowledged that it will be far more difficult to sell any agreement to rank and file members of Congress just two weeks before Election Day.
The House already has rejected one compromise negotiated between the White House and congressional leaders, mainly over provisions that would have raised gasoline taxes and increased Medicare costs. Those same two issues are the central points of controversy in the new bills.
The separate tax bills passed last week by the House and Senate created dozens of issues for negotiators to settle. However, the bills have several provisions that are identical or nearly so.
For example, they both would raise taxes on liquor, beer, wine, tobacco and airline tickets and impose a 10 percent tax on part of the cost of high-priced cars, planes, boats, furs and jewelry. They would raise to as much as $100,000 the amount of annual wages - now $51,300 - to which the 1.45 percent Medicare tax applies.
The compromise also is likely to require retirees to pay slightly more for Medicare Part B insurance for doctors' bills. They may be required to pay more than the current $75-a-year limit on out-of-pocket expenses before Medicare starts paying fordoctors' services.
Negotiators must decide whether to raise gasoline taxes - the Senate voted a 9-cent increase; the House none. Another hot issue in the House bill is whether the income taxes of all lower- and middle-income people should be increased by eliminating next year's scheduled inflation adjustment.
A surtax on high-income taxpayers is one option that has considerable support among members of both parties. The House bill would impose a 10 percent surtax on people with taxable incomes over $1 million a year.
However, there are not enough such people - fewer than 65,000, the Internal Revenue Service estimates - to produce the kind of revenue needed. The House provision would raise $7.6 billion over five years.
Some Democrats are pushing for a 20 percent surtax and an increase in the number of people to which it would apply. They would drop the threshold to as low as $200,000 and hope to persuade Republicans to accept $300,000.
A 20 percent surtax at the $200,000 level would affect 400,000 or so couples and individuals whose taxable incomes - after deductions and exemptions - totaled in the $300 billion range on returns filed last year.