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Packwood Vows Tax Reform Bill This Year : Senate Finance Panel Opens Hearings on Several Such Proposals

Times Staff Writer

Sen. Bob Packwood (R-Ore.), chairman of the tax-writing Senate Finance Committee, pledged Thursday that “there will be a tax reform bill this year” as he opened hearings on several reform proposals.

And despite his earlier skepticism about the need for major changes in the tax code, Packwood predicted that his committee will produce a bill for President Reagan’s consideration “no later than the end of this year.”

Advocates of the reform plans paraded their programs before the committee, arguing that lower rates and the elimination of some deductions will satisfy a national demand for fairness in paying taxes. The Administration tax plan is expected to be unveiled next week.

‘A Deeply Held Desire’

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“The desire for tax reform is deeply held by the American people,” said Rep. Richard A. Gephardt (D-Mo.), co-author of one of the major plans.

But the disagreements among committee members and witnesses at the start of what Packwood called a “long, long series of hearings” demonstrated the difficulty of preparing major tax reform legislation in a relatively short time.

Sen. William V. Roth Jr. (R-Del.), for example, offered a proposal that would lower the top personal tax rate from 50% to 34%, allow individuals to put aside up to $10,000 a year tax-free in “supersavings” accounts and create a new 5% tax on business revenues.

But another leading reform advocate, Rep. Jack Kemp (R-N.Y.), exclaimed “no, no, no, no” when asked about Roth’s proposed new tax on business, complaining that it would depress production and economic activity. Ironically, Kemp and Roth--now promoting highly different versions of tax reform--were the legislative authors of the 25% cut in personal tax rates enacted by Congress in 1981.

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Unhappy With Proposal

Kemp’s plan promises the lowest personal tax rate, 25%. He and his co-author, Sen. Bob Kasten (R-Wis.), are unhappy with the proposal being prepared by the Reagan Administration because it is expected to set a maximum personal rate of 35%--a level Kemp considers too high.

“We’re going to see if we can influence the Treasury and President Reagan to bring the top rate down,” he said.

The Administration plan also is expected to propose ending the federal deduction for state and local taxes, a financial blow for taxpayers in such high-tax states as California, New York and Michigan, Kemp noted.

The Treasury is hoping to present the Administration reform package next week, but some issues apparently are still unresolved and could delay the presentation, sources indicated Thursday.

Hoping to achieve a consensus approach to tax reform, Administration officials have been meeting with Kemp and Kasten, the prime GOP sponsors, as well as with the authors of the most widely publicized Democratic plan, Gephardt and Sen. Bill Bradley (D-N.J.). But so far, participants have agreed only that they all want lower tax rates and a fair tax system. Thus, the Administration plan will be just one of several tax reform blueprints to be considered by Congress.

On the House side, members of the tax-writing Ways and Means Committee have been expressing skepticism recently about the prospects of any legislation’s emerging this year. But Packwood, in a more optimistic view, said at Thursday’s hearing that the Senate Finance Committee is planning four to six weeks of hearings with testimony from 500 witnesses and that it then will try to fashion a tax bill.

Packwood himself is displeased with the Administration’s apparent intention to tax the value of employee fringe benefits, including health and life insurance. But he said that “there is no point in trying to second-guess the Treasury bill” before the final version becomes public.

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“The mood is here--I am convinced a tax reform bill can be passed this year,” he emphasized in remarks to reporters after the hearings.

However, if rates are to be lowered, tax deductions and credits must be eliminated--a move that seems likely to conflict with the political appeal of retaining the deductions.


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