Vote, Likely Today, Pits Poor Against Key Industries : Lawmakers Agonize Over Tax Bill

Rep. Mickey Leland is preparing to cast one of the most difficult votes of his political career on the sweeping tax bill that is scheduled to reach the House floor today..

As chairman of the Congressional Black Caucus, the liberal Leland, a Texas Democrat, realizes that the bill would remove more than 6 million poor people from federal income tax rolls. But, as the representative of a downtown Houston district that contains more oil company headquarters than any other congressional district in the country, Leland says he is “leaning against” the bill because it would sock the already depressed oil industry with $4 billion in new taxes over the next five years.

‘Very Tough Decision’

“For once in my life,” he said, “I’ve been hit with a very tough decision that (must be decided) parochially.”

Leland’s dilemma is typical of the way the massive bill is pulling House members in opposite directions at the same time, and his decision could be crucial. Supporters are cautiously predicting that the bill will be passed, although a final vote may be delayed until Thursday if House Democratic leaders are not certain by late today that they have enough votes for passage.

The bill, written by the heavily Democratic House Ways and Means Committee, differs significantly from President Reagan’s own proposal, but he is urging passage so that the Republican-controlled Senate can have a chance to modify it. Before the decisive moment, the House will vote on--and almost surely defeat--an alternative tax measure produced by House Republicans.

The Ways and Means bill has divided groups that normally find themselves allied and created some unusual alliances. Although House Democrats are feuding among themselves, most of them are siding with Reagan to save the idea that he set as the top legislative priority of his second term--eliminating many popular tax deductions and reducing tax rates. And the primary opposition to the bill is coming from House members of his own party.

‘Modest Gains’ Seen

The Administration continued lobbying for the bill Tuesday. In a statement signed by Beryl W. Sprinkel, Reagan’s top economic adviser, and Assistant Treasury Secretary Manuel H. Johnson, the Administration contended that the Ways and Means Committee bill would produce “modest economic gains,” compared to current law.

The U.S. Chamber of Commerce, among other groups, has argued that the bill would retard economic growth. But the White House said that Reagan’s Council of Economic Advisers, which Sprinkel heads, “does not predict a recession in 1986 or later years as a result of either the Ways and Means bill or the Republican alternative.”

Sprinkel, according to the White House, told congressional leaders during a White House briefing that the Democratic version of the tax bill would spur economic growth over the longer term, even though it would slow growth in the short term.

But Republicans were unconvinced. Rep. Trent Lott of Mississippi, the second-ranking Republican in the House, called the Ways and Means bill “a good concept twisted into a pretzel.”

Rep. John J. Duncan of Tennessee, the senior Republican on the Ways and Means Committee, said that, when he and a Republican colleague drew Sprinkel aside after the briefing, Sprinkel told them that the bill “would play hell with the economy.” And a White House official confirmed that Sprinkel still opposes the Ways and Means version.

Harsher on Business

The committee’s bill would be somewhat more generous to individuals and harsher on business than Reagan’s proposal. It would shift $140 billion in tax liability from individuals to businesses over the first five years, $17 billion more than Reagan’s bill.

The House bill would reduce the top individual tax rate to 38%, down from today’s 50% but more than the 35% Reagan proposed. It would also preserve certain individual tax breaks--chiefly the deductions for state and local tax payments--that Reagan wants to eliminate.

On the business side, the House bill would reduce the top corporate tax rate, now 46%, to 36% instead of the 33% that Reagan had urged. Compared with Reagan’s proposal, the House bill is more generous to small business but tougher on oil firms.

On the eve of the final House vote, Speaker Thomas P. (Tip) O’Neill Jr. (D-Mass.) accused Rep. Tony Coelho (D-Merced), a member of his own leadership team, of working secretly with lobbyists trying to defeat the bill. Coelho, the House Democrats’ chief fund-raiser, must solicit campaign contributions from many of the groups that are lobbying hardest against the bill.

‘Problems Down the Road’

“Tony denies it, but I know he had (a) meeting, and I know that they’re out there working,” O’Neill said. “I told Tony . . . : ‘Stop doing what you’re doing. You’re going to have problems down the road if you continue to act like this.’ ”

Coelho insisted that he is not working against the bill and has not yet decided how he will vote.

In addition, O’Neill accused Rep. John P. Murtha (D-Pa.), who usually operates as one of his closest lieutenants, of “working hand in glove with the steel people” to salvage tax benefits for one of his district’s big industries.

Rep. Robert T. Matsui (D-Sacramento), a Ways and Means Committee member and one of about 30 Democrats working actively to round up votes for the bill, said: “Among Democrats, the issue seems to break down on regional grounds, rather than on traditional political positions. Our major problems are in Texas, Louisiana and Oklahoma, where oil interests are strong, and in Ohio and Pennsylvania, where there are worries about the effects on heavy industry.”

Disaffected Democrats

With such large blocs of their own members against the bill, Democratic leaders say that they cannot count on the strength of their 253-182 House majority alone to pass the bill.

House Republican leaders are trying to rally their members behind their own proposal, which would impose less of a tax burden on business than the Ways and Means bill. The Republican plan would not allow full deductibility of state and local taxes, and it would exempt more people from paying income taxes.

Eleanor Clift contributed to this story.