A new tax package sent to the floor of the U.S. House will strengthen Medicare and Social Security while granting a 10 percent cut in income taxes, says Fayette County's U.S. representative, Mac Collins.

The Financial Freedom Act was approved last week by the Committee on Ways and Means, of which Collins, R-Hampton, is a member.

“This tax bill works because it is based on the Republican balanced budget resolution, which saves and strengthens Social Security and Medicare, rebuilds our sagging defense, helps education, and finally, it provides tax relief for hard-working American families,” said Collins.

The bill provides a phased-in 10 percent across-the-board tax cut, removes a “tax penalty” on married couples, offers help with medical care, and encourages savings and investment by providing a tax exclusion for $200 (singles) and $400 (joint filers) interest on savings, Collins said in a news release following the vote.

Collins also scored legislative victories by securing the addition of two amendments that he said would cut red tape and reduce taxes.

“The tax cuts in the Financial Freedom Act do not `give back' money to taxpayers; they simply take less out of each worker's paycheck,” Collins said. “Americans pay 38 percent of their income in taxes, as much as they spend on food, clothing, shelter and medical care combined. The average family pays twice as much tax now than it did in 1985 and a higher percentage of their income in taxes than at any time since the build-up for World War II. Why should this be so, when we are at peace, have a balanced budget, and are running annual surpluses?”

In his release, Collins invoked Federal Reserve Chairman Alan Greenspan, saying Greenspan “prefers tax relief to more spending, and I agree.”

The bill establishes a gradual reduction of tax rates over ten years,” Collins said. “It cuts the 15 percent lowest rate to 13.5 percent, and the top rate, of 39.6 percent is reduced to 35.7 percent.

“We broaden Education Savings Accounts so we can reduce the tax costs for parents saving money for their children's educations,” Collins said. “Some 70 percent of these ESA savings would go to families with children in public schools. We encourage small businesses to invest by reducing capital gains tax rates.

“By phasing down and eventually repealing the estate tax,” he added, “we will preserve the family farms and businesses that will otherwise have to be sold to pay the death tax. The bill makes health coverage more affordable by allowing taxpayers not fully covered by an employer-sponsored plan to deduct the costs of health insurance,” he added.

The legislation also provides married couples with a larger joint deduction to eliminate the “marriage penalty,” he said.

A Collins-authored amendment simplified taxation of distilled spirits wholesalers so that the taxes would no longer provide an advantage for foreign-distilled spirits, he said. He also succeeded in amending the Financial Freedom Act to make it possible for land owners who occasionally sell timber to sell their timber in lots. Under present regulations, land owners can be categorized as “dealers” by the Internal Revenue Service and must use a more wasteful “pay as cut” method to qualify for certain capital gains tax treatment.

This method often results in waste of timber and land, as well as tax avoidance, Collins sais. “This was a win-win amendment — even the IRS wanted to simplify this provision of the code,” Collins said.