Treasury Plan on Business Tax Hike Surprises Reagan

President Reagan expressed surprise in an interview published today that his Treasury Department’s tax overhaul plan would raise taxes on corporations, and said he has not been convinced of the need to do so.

The plan would boost corporate taxes by 37%. That change, coupled with elimination of some deductions and paring of others, would pay for an overall reduction in individual income taxes averaging about 8%.

In the interview conducted Thursday with the Wall Street Journal, Reagan expressed surprise to learn the proposal would raise taxes on corporations. “I haven’t even made an attempt to study that bill in detail that much to know that,” the President said.

‘Only People Pay Taxes’

“I assume that that would mean things that would be taken away from them (corporations) that are present deductions,” Reagan said. “No, I would have to be convinced of the need to do that because I’m a believer that one day we must recognize that only people pay taxes.”

The “things” that corporations would lose under the Treasury plan would be accelerated depreciation, which permits recovery through the tax system of money spent for plant and equipment, and the investment tax credit, under which the government pays up to 10% of the cost of machinery.

Reagan repeated in the interview that any tax plan he recommends to Congress--and he has yet to endorse specifics of the Treasury plan--would produce no more money for the government than does the present system.

However, if the big corporate tax changes were dropped from the Treasury proposal, Congress would have to find other ways of paying for the reduction in individual tax rates. The two corporate changes would be expected to save the Treasury $100 billion in 1990 and more in each successive year.