Reagan Talks Taxes Despite Crisis : But Vows U.S. Will Not Surrender to ‘Grisly’ Terrorism

President Reagan, sticking to his schedule as the TWA hostage drama drags on, appealed to a major business-oriented group today to help gain congressional approval for his tax overhaul plan in time to “give America the best Christmas present we’ve ever had.”

In an address to the national convention of the U.S. Junior Chamber of Commerce, Reagan said, “When it comes to producing jobs, American small business is king. And small businesses will remain king because ‘America’s Tax Plan’ is the biggest jobs-creation bill in history.

“Help us get it passed by Thanksgiving, and then we’ll give America the best Christmas present we’ve ever had.”

Reagan inserted some remarks about the hostage crisis into his prepared text, telling the businessmen that he was doing everything possible to get the Americans freed in Lebanon but vowing that the United States would never surrender to “grisly” terrorism.

‘Must Not Yield’

To loud cheering he declared: “Let me say we must not yield to the terrorist demands that invite more terrorism. We cannot reward their grisly deeds. We will not cave in.”

He was rewarded with roars of “U.S.A.-- U.S.A.” from the Jaycees. White House officials said later that Reagan personally had written the reference to the hostage crisis into the speech on the flight to Indianapolis from Washington.

Against Tax Increase

He reiterated his pledge to veto any tax increase and pictured himself, as he has before, as a lobbyist for the people in his campaign for the tax plan.

“I know the special interests and their lobbyists are regrouping; they’re already swarming like ants into every nook and cranny in Congress,” he said. “But the American people have their lobbyist, too--you’re looking at him.

“Our plan will not increase the deficit, it is not a tax increase, nor will I ever permit it to become a tax increase--I will veto any tax increase the Congress sends me.”

Before the speech, Reagan had lunch with about 45 local residents and members of the Chamber of Commerce in Mooresville, Ind., a small town about 20 miles from Indianapolis.

Won’t Penalize Elderly

The President, who dined on pork tenderloin at Mac’s Family Restaurant, said in answer to a question that his tax plan would not penalize the elderly “in any way.”

Asked who would be hit with a bigger tax bill under his plan, Reagan replied, “The only people that we can see that will pay more taxes are those that presently are unfairly not paying their share, those that have been taking advantage of so-called tax shelters.”

Today’s speech was Reagan’s 10th out-of-town address plugging the plan he put forward May 28.

Reagan has instructed his diplomats to work around the clock to secure the release of the 40 American hostages from their Shia Muslim captors in Beirut, and he will be kept informed of developments no matter where he travels, aides said.

“He’s functioned as President in Santa Barbara, in Bonn and in Peking--he can do it in Indianapolis too,” White House spokesman Pete Roussel said.

Reagan has been portrayed by his aides as deeply concerned about the crisis, but not overly preoccupied by it. He has kept to the schedule of appointments that was announced before Friday’s hostage-taking.