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 WASHINGTON, Jan. 13 /PRNewswire/ -- While the inauguration is only days away, it might be August before taxpayers know for sure how Bill Clinton's campaign promise to raise top tax rates from 31 percent to 36 percent might impact them. Along the way, the public will bear witness to a seemingly endless stream of tax proposals and amendments from congressmen, senators, economists, tax experts, citizens' groups, and of course, lobbyists. They also will see how effectively the new administration handles the focal point of the presidential campaign -- the economy.
 The first solid hints of Clinton's tax policy proposal will likely come in his inaugural address on Jan. 20, according to C. Clinton Stretch, director of Tax Legislative Affairs at Deloitte & Touche. "The new President is expected to tell the country that he is about to send to Congress his recommendations for changes in the tax law," Stretch said. "If he does not mention taxes prominently, the inaugural address may signal a shift in emphasis from the campaign, indicating that tax legislation will move less rapidly than expected."
 In Washington, however, rapid is only a relative word, says Stretch. So even if a tax bill does become one of Clinton's top priorities, the final bill might not reach the President's desk until Congress's August recess, says Stretch. Reason? Procedures that are as old as the Constitution itself.
 Experience shows that each significant step the Congress takes on a new budget and taxes will occur immediately before a Congressional recess. On that basis, tax legislation will likely pass major hurdles just before April 5, when Congress leaves for Easter recess; May 28, the start of the Memorial Day recess; July 2, the actual start of the July 4 recess; and Aug. 9, the start of summer recess. Work on the bill could be concluded and the legislation signed by the President by the July 4 recess, but everything would have to fall into place quickly for that to happen, says Stretch.
 Here is a glimpse of what to expect in tax legislation -- and how to judge the new administration's capabilities -- as the first months of the Clinton Administration become part of history:
 Budget Message
 By law, the President must formally outline his budget plan, which must reflect any significant changes in tax policy, in his annual budget message to Congress on the first Monday in February -- Feb. 1, 1993. Since Clinton will have been in office only 11 days, however, the Feb. 1 date could slip.
 What to watch for: The longer the delay, the more questions will be asked about the administration's ability to act decisively. The 1994 fiscal year budget will be the first opportunity the country gets to see the specific details of the Clinton economic plan and judge its logic and cohesion. It also will be the first time the public gets to judge the credibility of the President's new economic team.
 Ways and Means Hearings
 The House Ways and Means Committee will schedule hearings on the proposal in mid-to-late February and probably conclude in March. The Constitution requires that all revenue legislation originate in the House. However, with all the clamor over the economy in the campaign, the House and Senate will likely act concurrently as long as the bill technically begins in the House.
 The new secretary of the treasury, director of the office of management and budget and the director of the Congressional Budget Office will be lead-off witnesses, followed by economists, tax experts and a stream of representatives of special interests that might be affected by the tax legislation.
 What to watch for: Since the committee chairman and his staff control the hearings, the structure of those hearings will give an early indication of whether the Democratic leadership intends to modify the new President's proposals significantly. "Since many witnesses appear by invitation, these invitations can be manipulated to orchestrate either a love-in for the new administration's proposals or an intense debate on particular items," said Stretch.
 Senate Finance Committee Hearings
 The Senate Finance Committee will hold similar hearings after the Ways and Means Committee hearings have concluded.
 What to watch for: Selected witnesses will likely appear for the purpose of setting up Senate amendments to the House bill.
 Ways and Means Mark-up'
 The Ways and Means Committee will hold a "mark-up" session at which it will make whatever amendments to the President's proposal it deems necessary. Or, it could start fresh with a "Chairman's mark" and craft its own tax legislation, although that would be unlikely given that Clinton's proposals to date borrow heavily from work done by the Committee last year.
 Although the "sunshine" law requires that the committee meet in public forum, the rules do allow the committee to meet in Executive Session to conduct its decision-making away from the eyes of special interest groups, the press and the public in general.
 What to watch for: How will the particular interests of Ways and Means Committee members be addressed? Many have pet projects they will want to include in the tax bill, and the administration will likely leave some acceptable revenue-raising measures out of its proposals so there will be room to fund some member amendments. If the new administration appears unsympathetic to the needs of committee members, its long-term relationship with the committee could be damaged.
 Full Vote of the House of Representatives
 The Ways and Means recommendations are issued in the form of a report and sent to the full House for a vote. The Republicans will likely offer a substitute bill and propose to resubmit the bill to committee for redrafting.
 What to watch for: While these Republican initiatives will likely fail, they will be important indicators of their position on taxes and begin to frame the debate for the 1994 mid-term elections. The most important question on the House floor may be how many Republican support the Administration's bill on final passage. If Clinton can rely on moderate Republicans for support of his programs, he will have more flexibility in dealing with the most liberal wing of the Democratic party.
 Senate Mark-Up
 Following House action, or perhaps, concurrently, the Senate Finance Committee will hold its own mark-up and send its recommendations to the Senate for a vote. Although the committee usually meets in public session, members may go into party caucus to work out proposals.
 What to watch for: In the Finance Committee, the chairman typically exercises less control over the members' amendment process. As a result, the tax bill will probably pick up a fair number of amendments.
 Senate Action
 Unless a motion to close off debate (cloture) is passed or a bill is being considered under the Budget Act, the Senate has no restrictions on the right to debate a bill or offer amendments.
 What to watch for: If significant amendments are added in Finance Committee, the Senate floor debate may result in a "feeding frenzy" in which non-committee members offer amendments of interest to their constituents or supporters. Consequently, the tax bill will probably take much longer to move through the Senate than the House. "The fee- wheeling nature of the Senate will present the greatest risks for the new administration, and the President will try his best to appear to retain control over the Senate's budget process," said Stretch.
 Conference Committee
 Differences between the Senate and House versions must be worked out by a conference committee made up of the most senior members of each committee. Some important details of the two bills that go to conference will likely differ significantly from Clinton's original proposals.
 What to watch for: The effectiveness of Clinton's Treasury team will be judged by how well they are able to compromise and at the same time, reverse defeats suffered on the floors of the Senate and House.
 Deloitte & Touche, one of the nation's leading professional services firms, provides accounting and auditing, tax and management consulting services through 15,300 people in more than 100 U.S. cities. Deloitte & Touche is part of Deloitte Touche Tohmatsu, a global leader in professional services with 56,000 people in offices in 108 countries.
 -0- 1/13/93
 /CONTACT: Harriet Rosenbloom, 203-761-3380; Mark Berman, 212-492-3661; or Barbara Micale, 212-492-3672, all for Deloitte & Touche/

CO: Deloitte & Touche ST: District of Columbia IN: FIN SU:

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