Key Treasury Official Predicts ‘Historic’ Tax Reform Victory

Deputy Secretary of the Treasury Richard Darman, in his first public speech since moving from the White House to the Treasury Department, vowed Monday that tax reform will achieve a “historic” victory, propelled into law by a Populist movement that “extends beyond the stereotypical ‘blue-collar’ and ‘red-neck’ America into the vast world of the white collars.”

As Americans rushed to complete their tax forms by Monday’s midnight deadline, Darman, the second highest official at the department, said the current tax code has become so burdensome and complex that it appears “bent on self-destruction.”

In an outspoken speech to tax lobbyists interested mainly in preserving the current system, Darman--considered one of the key legislative strategists in the Reagan Administration--outlined in blunt terms a political plan for winning support for tax reform by galvanizing “the millions and millions of white-collar workers (who) have somehow been victims of a con.”

New Republicans

The right-hand man of Secretary of the Treasury James A. Baker III implied that the White House tax reform plan, which is scheduled to be released next month, would not only “unleash the vast productive energies of millions and millions of Americans who are now living lives of quiet frustration, alienation and underproductivity,” but would also help turn many of the children of Depression-era Democrats into Republicans.

These “forgotten white-collar workers . . . have changed clothes, yet, in many respects, they have not significantly changed their place,” Darman said. He suggested that such grass-roots voters will back President Reagan’s advocacy for a fairer, simpler tax system that would end many of the loopholes defended by big-business Republicans and big-government Democrats.

Meanwhile, the Internal Revenue Service conceded that it is still running behind last year’s schedule for processing tax refund checks. IRS spokesman Ellen Murphy, blaming the problem partly on computer glitches and a higher number of late filings, said that “we are still about 18% behind in refund returns compared to last year.”

Called ‘Disastrous’

And the head of an IRS employee union called the delays “the most disastrous income tax processing season in history,” attacking the Administration for overtaxing IRS workers by cutting the agency’s budget.

“The country could lose billions of dollars in the next five years if present conditions are allowed to continue,” Robert M. Tobias, president of the National Treasury Employees Union, said.

But Edwin Dale, spokesman for the Office of Management and Budget, denied that budget cutbacks are to blame for the processing problems. “The IRS has received increasing resources--not decreasing,” he said.

The IRS budget for collecting taxes this year is $3.55 billion.