The Michigan Daily-Friday, May 12, 1978-Page 7
Tax cut faces tough opposition

WASHINGTON (AP) - The House
Ways and Means Committee voted
Thursday for a partial rollback of
Social Security payroll tax increases
that could save some workers as much
as $123 next year.
The biggest savings would go to
higher paid employees, but the change,
if it becomes law, would result in some
savings for all employees and their em-
ployers.
The proposal approved Thursday is to
be incorporated into tax legislation and
will face heavy opposition ahead. Rep.
Al Ullman, (D-Ore.), committee
chairman, told reporters he thinks the
House would pass the cutback in
measure but that he expects con-
siderable opposition in the Senate.
PRESIDENT Carter has said he
favors leaving the Social Security in-
creases intact. Congress just enacted
Sino-Soviet
border war
(Continued from Wage 1)
Chan handed Soviet Ambassador V. S.
Tolstikov a message, saying the
"atrocities of the Soviet troops con-
stitute an organized military
provocation against China occurring at
a time when the Sino-Soviet boundary
negotiations had just resumed and are
a serious infringement on China's
sovereignty and territorial integrity."
No major progress has been reported
in the border talks.
The Soviet Union and China, which
signed a 30-year friendship allianced in
1950, have been at odds since the early
1960s over territorial claims, issues of
communist ideology and supremacy in
the world communist movement.
Peking has claimed about 12,700
miles of Soviet border territory,
charging the land was taken by
"unequal treaties" signed in the 18th
and 19th centuries.

the hikes last December.
The committee-approved plan would
involve using general tax funds from
the U.S. Treasury - an estimated $14.5
billion over two years.
Sen. Russell B. Long, (D-La.),
chairman of the Senate Finance Com-
mittee, has expressed strong opposition
to any use of general tax funds to keep
the troubled Social Security system out
of deficit, and there is other opposition
in Congress as well.
The committee approved the rollback
provision on a 19-18 vote, with Ullman
casting the tie-breaking ballot. The
panel previously had discussed and
discarded a series of other proposals,
most of them also involving some use of
general funds.
THE ROLLBACK proposal, offered
by Rep. Sam Gibbons, (D-Fla.), would
involve reducing the trust fund for
Medicare hospitalization, now financed
from the Social Security payroll tax,
and replenishing it with general
revenues.
Under the law approved by Congress
last December, the Social Security tax
rate paid both by employers and em-
ployees would go to 6.13 per cent next
January and the maximum wage base
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on which the tax would be levied would
go to $22,900. In 1980 the tax rate would
remain the same but the wage base
would jump to $25,900.
The committee proposal would cut
the tax rate back to 5.85 per cent, the
1977 level, and would set the maximum
wage baseat $21,900 for 1979 and $23,900
for 1980.
THIS WOULD mean the maximum
tax any worker would pay in 1979 would
be $1,281, instead of $1,404 under
present law - a reduction of $123 for
workers paying the maximum. In 1980,
the maximum would be $1,398 instead
of $1,588.
Because of the tax rate reduction,
there would be savings also for those
earning less than the maximum
amounts. For example, a worker ear-
ning $10,000 would save $20 in tax
during each year.
Many of the complaints congressmen
have been hearing about the tax in-

creases approved last year have come
from higher paid employees, because
much of the tax increase was brought
about by substantially raising the
maximum wage on which taxes were
levied.
Ullman emphasized that the commit-
tee's action was not to be interpreted as
a permanent decision to use general
Treasury revenues to help finance
Social Security.
He said the tax-writing panel was
trying to buy time during which a
thorough review of the Social Security
system could be carried out. The
proposal is for two years only. A special
commission created by the 1977 law is
working on basic proposals, both short
and long-range, for revising Social
Security and its financing.
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