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Dole Says He Could ‘Live’ With Minimum Corporate Tax in Budget Plan to Cut Debt

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Times Washington Bureau Chief

A move in Congress to impose a minimum corporate tax as part of a budget deficit-reduction plan gained momentum Monday when Senate Majority Leader Bob Dole (R-Kan.) indicated that he could support such a proposal.

In the past, Dole repeatedly has argued that a minimum tax should not be part of a budget package but should be included instead in the tax simplification plan President Reagan is to announce on May 28.

But Dole told reporters Monday it is “possible” that a group of House Democrats will succeed in incorporating a minimum tax in the overall budget resolution. Although he said that he is not advocating such a tax, he added that he could “live with it.”

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‘Live Proposition’

If the measure were to pass the House by a large margin, Dole said, it would be a “live proposition” in a conference committee to resolve differences between House and Senate versions of the budget bill.

House Budget Committee Chairman William H. Gray III (D-Pa.) also said Monday that he “could support” a minimum tax. Gray, in an interview, said that he had found “a lot of sentiment” among House Democrats to incorporate the tax in the budget package.

But House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) sent a letter to his Democratic colleagues Monday urging them not to support a minimum tax either as a back-door method of reducing the deficit or as a substitute for tax reform. It should be a part of tax reform, he said.

“No matter how we phrase it, a ‘minimum tax’ used to bolster the budget resolution is a tax increase,” he said. “More than that, it’s a tax increase to pay for spending increases or, worse, to protect special interests.”

Scheduled for Vote

Several Democrats are expected to offer an amendment for such a tax when the House Budget Committee’s $56-billion deficit-reduction plan comes to the floor for a vote later this week.

One Democratic plan would include a freeze on Social Security benefits and $12 billion in new taxes, probably through a minimum tax on those corporations that now pay little or nothing.

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That package is scheduled to be presented in debate Wednesday as an alternative to a proposal approved last week by the House Budget Committee, which includes no new taxes and would not restrain growth of Social Security benefits.

Where the committee’s plan would cut the fiscal 1986 deficit by $56 billion, the alternative approach would make a $75-billion reduction and “put us on the path (to) balance our budget within five years,” said Rep. Buddy MacKay (D-Fla.), a member of the Budget Committee and one of the sponsors of the alternative. Annual deficits now are projected to exceed $220 billion in the foreseeable future.

The tax plan is expected to be debated today at a caucus of House Democrats. At a caucus last week, Democrats agreed on the budget plan that later was approved by the Budget Committee.

Future Appears Gloomy

Despite Gray’s comments and Dole’s tacit support for the minimum tax measure, its chances of passing the House as part of the budget resolution do not appear good. The Administration has objected on grounds that it would amount to a tax increase, and Speaker Thomas P. (Tip) O’Neill Jr. (D-Mass.) said Monday that he also opposes including the tax in a deficit-reduction plan.

O’Neill acknowledged that there probably are “quite a few votes” for the tax among Democrats, but said: “I just don’t feel as though we ought to have anything (like the tax) at this particular time.”

Dole, who discussed budget issues in two sessions with reporters, repeatedly stressed that he agrees in principle with the need to impose a minimum corporate tax.

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“I don’t think anybody thinks corporations who make profits should not pay taxes,” he said. “On the other hand, you can’t condemn corporations who follow present law and use whatever deductions or preferences are available. I think it’s a cheap shot to get up and attack a corporation if the tax code allows it.”

Dole said he “wouldn’t be surprised” if the President includes a minimum corporate tax in his tax simplification plan. “So I don’t think anybody’s resisting it,” he added. “I think it’s a question of timing and how do you do it.”

At Dole’s request, Reagan delayed the introduction of his tax simplification measure from this week until May 28 to give Congress a chance to concentrate on the budget.

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