Tax Overhaul Possible in ’85, GOP Says : Leaders Tell Reagan They Expect Changes in Plan He Unveiled
Republican leaders told President Reagan today that Congress can pass tax-overhaul legislation this year, but they indicated that there will be changes from the proposals he unveiled last week.
The chairman of the tax-writing Senate Finance Committee indicated that he might seek lowering the top individual tax rate to 25% instead of the 35% the President proposed, but was rebuffed.
Meanwhile, corporate executives, on Capitol Hill and later at the White House, said the plan has broad support, but they, too, said they saw room for improvements.
“The time for tax reform is now,” John M. Richman, chairman of Dart & Kraft Inc. told the House Ways and Means Committee. “The public wants tax reform. . . . And I am here today to tell you that the mainstream of American business is on your side.”
Bigger Dividend Deduction
William Howell, chairman of J. C. Penney, said corporations deserve a bigger deduction for dividends paid than the 10% recommended by Reagan. He also said taxing a share of employer-paid health insurance would penalize labor-intensive industries such as retailing.
Richman and James L. Ferguson, chairman of General Foods, expressed concern about the proposal to require some businesses to, in effect, pay back a portion of the tax benefit they gained as a result of the big tax reduction of 1981. Reagan wants to take back about $56 billion over four years to keep those firms from reaping a windfall when corporate rates fall.
The corporate executives were the leadoff public witnesses as the committee began examining Reagan’s tax plan.
Reagan had his first meeting with Republican leaders from the House and Senate since he outlined proposals last week to generally reduce individual and corporate tax rates, change or eliminate a variety of tax breaks and somewhat increase the tax burdens on business.
Possible This Year
Afterward, the legislators agreed that action is possible this year.
Senate Majority Leader Bob Dole had previously said it was unrealistic to expect Congress to complete action this year on sweeping tax legislation. But today he said, “We indicated (to the President) there may a possibility of completing action” this year on the tax bill.
House Republican Leader Robert H. Michel said, “Everybody’s going to be geared to trying to get something done by Christmas.”
However, no one is saying the final measure that reaches the President’s desk will be identical to what he has proposed.
Sen. Bob Packwood (R-Ore.), the Finance Committee chairman, said, “I indicated to him (Reagan) I would like to get the individual rates down to 25%" without adding to the budget deficit.
Reagan’s plan would cut the top individual income tax rate from the current 50% to 35%.
Packwood said that reducing the top rate to 25% would cost the Treasury $35 billion to $40 billion. He said that could be made up by ending “some exceptions and deductions that are now allowed” but he declined to specify which ones he had in mind.
Dole said Reagan and others in the meeting agreed that they liked the idea of lower rates but that “first you have to find the revenue to do that, I think that’s the problem.”
As for changes, “it’s much too early to talk about all the things that will probably happen,” Dole said.