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Regan Expects Tax Reform Plan Passage Despite Criticism of ‘Idiots’

Times Washington Bureau Chief

White House Chief of Staff Donald T. Regan, branding two former Administration officials as “idiots” for criticizing President Reagan’s tax reform proposal as unfair, predicts that the measure will pass Congress this year with the support of a majority of Democrats.

During an interview this week with The Times, Regan defended the proposal and heatedly repudiated the remarks of Martin S. Feldstein, former chairman of the President’s Council of Economic Advisers, and David Gergen, former White House communications director. Both Feldstein and Gergen, like many critics, have charged that Reagan’s plan is disproportionately beneficial to upper-income taxpayers.

Noting that House Speaker Thomas P. (Tip) O’Neill Jr. (D-Mass.) testified last week that the President’s proposal was a “good beginning,” Regan said that Democrats have made a “clear indication” they will not leave the tax reform issue to the Republicans.

“The Democrats are with us on this--there will be more Democrats in favor of this bill than otherwise,” he declared. He said he expects the House to wrap up hearings on the tax plan within a week after its August recess and to pass it sometime in October. Final passage by Congress, he predicted, will occur in December.

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O’Neill’s Prediction

Similarly, O’Neill has said that he expects the House to complete action on the tax measure this year--but he has indicated he will try to shape it to provide more benefits for the poor and middle-class taxpayers and fewer for the wealthy.

Regan bristled during the interview when asked about an article by Feldstein and his wife, economist Kathleen Feldstein, published Monday in The Times. The Feldsteins argued that the Reagan proposal to raise personal tax exemptions from $1,080 to $2,000 would “cause a huge revenue loss, disproportionately benefit higher-income groups and discourage work effort.”

Instead, they suggested that the proposal be revised so that only taxpayers in the lowest income tax bracket would be given $2,000 exemptions. Those in the middle-income bracket would receive $1,200 and those in the highest bracket--with incomes of $70,000 or more--would continue to get $1,080.

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“What idiot said that?” Regan demanded, staring at the tape recorder used in the interview. “What idiot said that?”

Amount ‘Out of Date’

Told the article had been written by Feldstein, he declared: “There’s nothing fair about that. That thousand (dollars) was put in--I forget how many years ago--never indexed for inflation, and it literally at this point is out of date and unfair to anyone that has any kind of a family.”

Regan also was asked in the interview about an article by Gergen in this week’s issue of U.S. News and World Report. Gergen concludes that the plan “provides generously for low-income families but skimps on the middle class and supplies a bonanza to the wealthy.”

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The magazine’s analysis of the tax plan showed these tax reductions for families of four that have two wage earners: $25,000 income, $391 savings; $40,000 income, $301 savings; $80,000 income, $691 savings.

Cites Many Factors

Regan rejected these figures, declaring that tax reduction “depends upon the composition of the family, where their income comes from, what states do they reside in, do they have home ownership, do they rent, do they itemize. . . . Those flat statements like that make no sense whatsoever. . . .

“He can be an idiot, too. And I’d want to see his figures as to exactly what were these hypothetical things that he set up before I just say that any $80,000 person only gets $691. Eighty thousand with 10 kids only gets $691? Eighty thousand, single person? Who’re you talking about? Does he live in New York state, where (Democratic Gov.) Mario Cuomo would weep for him, or does he live in Wyoming?”

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