2 rates `stagger' in as 5 for '87

WASHINGTON Although the compromise tax bill approved lastweekend establishes two rates on individuals, taxpayers will findfive rates next year ranging from 11 percent to 38.5 percent.

That's because of what tax legislators call "the stagger."

When the House and Senate passed different versions of a taxoverhaul earlier this year, they each contained the stagger - lowerrates would take effect in mid-year but elimination of deductionswould be effective from Jan. 1.

Rep. Dan Rostenkowski (D-Ill.) and senators including Robert J.Dole (R-Kan.) and Lloyd Bentsen (D-Tex.) raised alarms.

The stagger would mean that at least 7 million taxpayers fillingout returns in early 1988 would be hit with a tax increase, contraryto the ballyhooed tax cuts of the bill.

Half of those hit would have been families with taxable incomeof less than $50,000, the cherished heart of the Democrats'middle-class taxpayers.

And 1988 is an election year. The politicians didn't want anangry November reply.

But they couldn't just move up all the tax cuts to Jan. 1because that would have resulted in a bill that would cost theTreasury money during a time when eveyone is worried about risingbudget deficits.

So they came up with a patchwork plan that would impose fiverates for 1987 only.