Senators Back D.C. Tax Cut: Bill Would Set Flat Rate on Income

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Five senators last night promised to deliver cuts in income and capital-gains taxes and home-buyer credits to D.C. residents as part of a broader effort to nurse the District's economy back to health.

Comparing themselves to a basketball team - and Senate Majority Leader Trent Lott to Michael Jordan - the assembled senators said they would push and prod their colleagues to endorse a 15 percent flat income tax rate, among other measures.

"This is a great package," said Mr. Lott, Mississippi Republican. "It will make a difference. It will create jobs."

D.C. Delegate Eleanor Holmes Norton, a Democrat, praised Mr. Lott and echoed his statement that tax cuts would have an positive effect on residents who might otherwise leave the city.

"It is dramatic enough to have an immediate effect," Mrs. Norton said.

Although the tax-cut proposals have been in the works for some time, they were unveiled last night by a bipartisan group of senators who gathered in front of about 80 city residents at the Hart Senate Office Building for a town meeting hosted by Mrs. Norton.

Mr. Lott strode into the meeting 45 minutes late but was roundly applauded when he said the District "will be a Mecca" when tax rates are lowered, a telling point in a city that has seen its population fall from 800,000 in 1950 to 520,000 today.

The discussion last night centered on a new version of a Senate bill that joins a similar piece of legislation introduced in the House by Mrs. Norton.

Mr. Lott's proposal was introduced yesterday and is co-sponsored by Sen. Sam Brownback, Kansas Republican; Sen. Joseph I. Lieberman, Connecticut Democrat; and Sen. Connie Mack, Florida Republican. It would set a flat 15 percent federal income tax rate for all city residents.

It also would increase the standard deduction to $15,000 for single taxpayers and $30,000 for those who are married. In an effort to spark growth, the bill would eliminate capital-gains taxes on city investments.

The bill also includes a $5,000 credit for first-time home buyers, a gesture intended to lure young couples into buying property in the District.

In most ways, the Senate legislation mirrors Mrs. Norton's bill, though her plan does not include the home-buyer credit.

Also, Mrs. Norton's capital-gains provision only applies to D.C. residents who invest in the city. …