GOP PROMISES RELIEF ON TAXES NEXT YEAR.(MAIN)

Byline: CURT ANDERSON Associated Press

WASHINGTON -- With a final deal on a modest tax bill in hand, Republican leaders in Congress promised to return in January with bold plans for major tax relief, possibly including an across-the-board income tax reduction.

Tax provisions agreed to Thursday in the final catchall bill, totaling $9.2 billion over 10 years, would renew several expiring business tax credits and provide limited relief to farmers, self-employed people and some families.

The legislation also imposes a three-year ban on new state and local Internet taxes.

Senate Majority Leader Trent Lott, R-Miss., said the projected $1.6 trillion budget surplus would be more than enough for big tax cuts in 1999 as well as preservation of Social Security for the future.

Despite President Clinton's repeated promise to ``save Social Security first,'' Lott told reporters that tax cuts shouldn't necessarily await a rescue plan for the popular retirement program, especially since Democrats killed this year's $80 billion tax cut by depicting it as a raid on Social Security.

Lott ticked off a list of major tax cuts Republicans are likely to champion next year, assuming they retain control of Congress. The items include reducing income taxes, cutting further capital gains taxes on investments, eliminating the marriage penalty that affects certain couples and abolishing the tax on inheritances.

Democrats gave every indication that guaranteeing Social Security will be among their top issues.

For now, Republicans will have to remind voters of the five-year, $95 billion package they passed last year. That measure cut capital gains taxes, created the $500 per-child credit and cut taxes on airline tickets and inheritances, among other things.

Here are highlights of tax provisions included in the omnibus wrap-up bill Congress is expected to pass today:

HEALTH INSURANCE: Planned phase-in for self-employed people to deduct 100 percent of their health insurance premiums is moved up to 2003, compared with 2007 in current law. The deduction will be 60 percent in 1999.

FAMILIES: Middle-class households subject to the alternative minimum tax could exclude certain credits from income, such as the $500 per-child credit, adoption credits and some college credits.

INTERNET: A three-year ban on new state or local taxes on cyberspace commerce while a federal commission develops options for Congress. Existing taxes will stay on the books.

FARMERS: Income averaging that helps smooth year-to-year highs and lows is made permanent. Net operating losses could be carried back five years instead of two years, providing tax relief this year to 100,000 farmers. Farmers won't suffer tax consequences for accelerated government transition payments.

BUSINESS: Expiring tax credits are renewed until June 30, 1999, for research and development, firms that hire workers from certain low-income groups, the welfare-to-work program and for a program training workers displaced by international trade agreements. A credit dealing with companies that pay taxes overseas is modified to include banks, insurance companies and securities firms and extended a year.

BONDS: The state cap is lifted on private activity bonds used by local governments for housing, school loans and other economic activities.