December 10, 1991

A majority of the members of the House of Representatives voted tonight to repeal Connecticut's first tax on wages, which has enraged residents since it was approved three months ago. But the vote was short of the two-thirds margin needed to override a veto promised by Gov. Lowell P. Weicker Jr. The battle on the tax between the Governor and the Legislature is expected to rage through this week at least, and perhaps into next year. Mr. Weicker, a third-party Governor who proposed the tax in February, stood by it through three budget vetoes last summer and has vowed to defend it again by vetoing the bill passed tonight. The vote in the House was 86 to 63, or 15 votes short of the two-thirds majority of 101 votes needed to override the Governor's veto. The Senate would also have to pass the bill and provide a two-thirds margin to override a veto if the measure is to become law. Repeal leaders said after the vote that the fight was not over and that a strong vote in the Senate on Tuesday could still swing some House votes toward repeal. "When the Senate vote comes through well over two-thirds, the pressure on the House members will be very strong," said Representative Reginald L. Jones, a Republican from Darien who led the repeal forces in the House debate, which raged for more than five hours before the vote. Raising Other Taxes The repeal plan, which critics attacked as financially unbalanced and cruel to the poor, would raise most other taxes and cut state spending by about $213 million to compensate for the $1 billion that would be lost by eliminating the wage tax. Repeal leaders released the final elements of their plan to replace the income tax just hours before the debate began, giving no time for public comment or analysis. But because the pivotal vote will actually come with the attempt to override the veto, probably later this week, the details were ignored by many speakers anyway. Some focused their comments on the next legislative elections, now only 11 months away, or on the broad philosophical issues of taxation, representative government and whether it is nobler to vote one's conscience or to mirror the will of one's constituents. It was clear that many lawmakers viewed the importance of the day's work in larger terms than the success or failure of one piece of legislation. Many spoke of the huge rally on Oct. 5 that drew tens of thousands of tax protesters to the Capitol grounds and the vast unrest that those people represented. "We can't just dismiss 50,000 people who came to protest," said Robert M. Ward, a Republican from North Ford. "Please vote with me to repeal." If the repeal bill survives, it would restore much of the tax code that existed before August. But the measure has a handful of twists that would give some money back through tax cuts, take some away through spending and service cuts and leave some in place. 7 Percent on Capital Gains The state sales tax, now 6 percent, would go up to 8 1/4 percent, with the last one-quarter percent tacked on to pay off last year's deficit. And while the tax on wages would be revoked, the previous taxes on other types of income would be restored in a way that would hit more people -- and some people much harder. Capital gains from the sale of assets or stock would be taxed at 7 percent as before. But for the first time, gambling income would also be taxed at that rate. Gambling income in the state is expected to go up next year when the Mashantucket Pequot Indian tribe opens a casino. An earlier version of the bill approved tonight would have expanded the the state's gambling franchise with the introduction of video-slot machines. Of that gambling revenue, about $60 million a year would have been channeled back to local government to aid distressed cities. But gambling opponents amended the bill on the floor to eliminate the slot machines. The budget bill would cut about $213 million from the $7.6 billion budget for the year that ends June 30. The single biggest reduction -- $50 million -- would come from the state's contribution to general assistance welfare. Cuts in Welfare Under current law, the state pays 90 percent of local welfare costs. The House bill would cut that contribution to 45 percent, leaving towns the option of making up the difference themselves or cutting benefits. The House bill would also tax income from dividends and interest at a sliding scale of from 5 percent to 10 percent. That is similar to the old law, but with a tax cut at the top, which was previously 14 percent. Income from rents and royalties would be taxed for the first time under that schedule, erasing many of the gains. Debate on the plan echoed the elements of give-and-take embodied in the proposal. Supporters said that ending the system of wage-tax withholding would bring help the economy as residents opened their wallets. Opponents said the cuts were simply too harsh. "This is a very mean-spirited budget whether individuals want to believe that or not," said Representative Ernest E. Newton II, a Democrat from Bridgeport, who voted against the repeal plan.

In an unmarked workshop on an unassuming street in a suburb of gray and wintry Turin, engineers are going through the motions of keeping the least-kept secret of Italian motoring -- a new Fiat mini-car that, for many Italians will recall the cramped Fiat 500, which motorized the nation in the 1950's. The car, at present, is literally under wraps. Pre-introduction test models are disguised by masking tape that blurs their lines and covers the name. Word of the new arrival, though, long ago seeped out as Fiat S.p.A., long Italy's leading employer and the second-largest European auto maker, after Volkswagen, tries to find a new niche in the mini-car market. For many years that market was its staple, until competition increased from Volkswagen and Ford.

United Airlines won a fierce bidding war last night with American Airlines for the Latin American routes and other assets for sale at the liquidation of Pan American World Airways. The winning bid, for $160 million and offers of jobs for 1,000 former Pan Am employees, came at 11:20 P.M. in a dramatic bankruptcy-court auction that began at 3 in the afternoon.

Advertising spending in the United States will decline this year for the first time in 30 years, a leading industry forecaster said yesterday, calling it the largest drop in that closely watched barometer of economic activity since World War II. For the year, spending will total $126.7 billion, Robert Coen, senior vice president and director of forecasting for McCann-Erickson U.S.A., said at the opening session of the 19th annual Paine Webber Conference on the Outlook for the Media. That would be a 1.5 percent decline from the $128.6 billion spent last year, and it marks the second time that Mr. Coen has slashed his 1991 estimate. Last December, his forecast stood at $136 billion, up 4.6 percent; in June, he trimmed it to $132.6 billion, up 3.1 percent.

LONDON, Tuesday, Dec. 10 -- A judge has imposed a freeze on the assets of Kevin Maxwell, the younger son of Robert Maxwell, of up to $:450 million ($815 million), marking one of the first legal actions taken against the sons since the Maxwell publishing empire started unraveling. The freeze, imposed on Sunday, suggests that Kevin Maxwell, who is 32 years old and had the leading role in running the Maxwell empire after his father's mysterious death, is under greater suspicion than his older brother, Ian, of having moved assets out of employee pension funds and the two main public companies in the empire: the Mirror Group Newspapers P.L.C. and the Maxwell Communication Corporation.