COUNTY TAX CREDIT WINDFALL $7 MILLION

Missouri taxpayers with dependent children would stand to save nearly a half-billion dollars annually from a proposed $500-per-child tax credit that is part of the Republican seven-year plan to balance the federal budget, one study shows.

The tax credit is among other tax-savings and budget-cutting provisions included in the Balanced Budget Act vetoed by President Clinton Dec. 6. However, the tax credit still figures in budget plans.

If approved, the credit nationwide would save $22 billion per year for 28 million families with 51 million children, shows the study conducted by the Heritage Foundation, a conservative think-tank based in Washington.

For the average family of two children, the credit would amount to the equivalent of one month's mortgage payment.

The credit has support of several members of Missouri's congressional delegation, including Rep. Bill Emerson and Sens. Christopher "Kit" bond and John Ashcroft, all Republicans.

"The $500-per-child tax cut will allow low- and middle-income families to keep more of what they earn and spend it in the way they -- not Washington -- see best," Emerson said.

Heritage said 582,332 Missouri taxpayers with 1,116,540 dependents would be eligible for the credit, which would yield $498,640,661 in savings. In Illinois, 1,306,658 taxpayers with 2,346,576 dependents would save $1,091,830,388.

The credit would be retroactive to October, the beginning of the federal government's fiscal year.

Population figures for statewide and national statistics are derived from income tax returns filed in 1991 and the number of dependents claimed. In figuring county-by-county statistics, population figures from the 1990 Census were used.

Based on the analysis, 12,418 children in Cape Girardeau County would yield their parents $6,954,080 in tax credits next year. Over the seven-year course of the budget plan that could mean $35,201,926 for taxpayers in the county.

For Scott County, 8,582 children would mean $4,805,920 in credits next year and $24,327,825 over seven years.

Projected tax relief provided by the credit in 1996 for other counties in the region: Bollinger, $1,170,400; Butler, $3,682,560; Dunklin, $2,909,200; Mississippi, $1,405,040; New Madrid, $2,171,120; Pemiscot, $1,868, 720; Perry, $2,241,120; and Stoddard, $3,031,280.

The credit is geared for middle-income families and is phased out for joint filers with combined annual incomes exceeding $110,000 and for single filers with annual incomes of $75,000.

For joint filers it is phased out at a rate of $25 for $1,000 over the threshold, making those with $130,000 in income ineligible. For single filers the credit is fully phased out at $90,000.

Two-child families earning up to $24,000 annually would find their entire federal income tax burden eliminated by the credit, as would three-child families with incomes under $26,000.

"The Balanced Budget Act of 1995 would allow American families to share the dividends of reduced spending through a lighter tax burden," Emerson said. "It must be pointed out that the budget plan's tax relief provisions are designed to help folks who need it most. The $500-per-child tax credit, for example, would go directly to working families -- 74 percent of this tax break to households earning less than $75,000."

While tax relief is needed, Ashcroft believes it can only be undertaken as part of a plan to balance the budget, said Doreen Denny, the senator's communications director. Cutting taxes without reducing the budget, she said, would make the country's financial problems more bleak.

Also, a reduced tax burden would prove beneficial to the economy. "Being able to return money back into the pockets of Americans is probably the best way to stimulate the economy," Denny said.

As of Tuesday, Republican leaders in Congress and the White House were still far apart on a plan to balance the budget by 2002.

"The time for true tax relief for hard-working families is long overdue," Emerson said. "For instance, the average family of four in 1948 paid only 3 percent of its income to Uncle Sam in income and payroll taxes. Today, the same family pays 24.5 percent. When you factor in local, state and Social Security taxes, families often end up spending more money on taxes than on food, clothing and shelter combined."