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laxes - they ve always defied the rule that what goes up must eventually come down. And with Congress' October budget agreement, it's happened again. Specifically, the agreement is aimed at trimming $492 billion from the federal deficit over the next five years. This savings, part of the largest-ever deficit-reduction package, will be achieved through stringent spending cuts and tax increases that few Americans will escape.
On the spending side, federal funding for a number of programs will be slashed. The targets of these cuts include Medicare providers and beneficiaries, farmers, federal workers, Medicaid, federal housing and student loan programs, veterans and the military.
For example, the annual Medicare deductible will rise from $75 to $100 in 1991, and Medicare reimbursement payments to doctors and hospitals will be reduced. In all, Congress estimates that spending reductions such as these are scheduled to save more than $265 billion over the next five years.
On the taxation side, Congress intends to offset the deficit by as much as $160 billion through increased income taxes and excise taxes.
The income-tax increases primarily affect higher-income taxpayers. Their top tax rate will be raised to 31 percent from the current 28 percent, and itemized deductions and exemptions will be reduced for adjusted grps?., it,a. incQjftes above $100,000. o;m b'jh'iuoq
Overall, taxpayers with annual incomes of $200,000 or more will experience a tax increase of about 6.3 percent. Most other income categories will see their taxes raised only about 2 percent. Taxpayers with less than $20,000 in income will actually receive an income-tax cut.
94.3%