White House Still Shy of Votes on Tax Revision

President Reagan’s tax-overhaul initiative barely clung to life Friday as the White House failed to develop a formula acceptable to both House Republicans and Democrats that would assure passage of the tax bill next week.

House Republicans pressed for the opportunity to offer a GOP amendment to the bill drafted by the Democratic-controlled Ways and Means Committee that would make the proposed $2,000 personal exemption available to all taxpayers and would delay implementation of any major tax changes until 1987.

Earlier this week, an effort to allow a vote on the tax revision plan was successfully thwarted by a vote of 223 to 202, with only 14 Republicans supporting Reagan.

‘Hold the Door Open’

In a statement, House Speaker Thomas P. (Tip) O’Neill Jr. (D-Mass.) said he would “continue to hold the door open to the President” but vowed he would not schedule another vote on tax-overhaul legislation until Reagan “informs me personally that he has a list of 50 to 75 Republican votes for passage of the bill.”

Similarly, House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.), in a telephone interview Friday evening, insisted that Reagan needed to deliver at least 50 Republicans by Monday if he wants a House vote on the measure this year. Democratic strategists said they expected about 170 to 180 Democrats would support the bill, which needs a majority of 218 votes to pass.

But efforts to reach an agreement faltered Friday when a closed-door meeting among Treasury Secretary James A. Baker III, O’Neill and Rostenkowski broke up--leaving the Administration still struggling to find enough GOP votes to prevent an embarrassing defeat on Reagan’s top domestic program.

White House spokesman Larry Speakes, in a briefing earlier in the day, contended that the Administration was now convinced that “the votes are there for passage of tax reform when tax reform will stand on its merits.”

Needs 15 Pledges

But Administration sources conceded that Reagan remained at least 15 pledges shy of the 50 Republican votes demanded by the House Democratic leadership, which is worried about possible defections from its own ranks on the tax issue.

Rostenkowski, also searching desperately for a way to salvage the bill his committee spent 2 1/2 months drafting, left open the possibility of a deal that might permit Republicans to adopt their $2,000 personal exemption “pro-family” amendment as part of their own alternative package, rather than amending the bill approved by Ways and Means.

“If they want to offer an amendment to their own bill, I wouldn’t discourage that,” Rostenkowski said in the interview.

However, the Republican alternative package is given almost no chance of passage. And Rostenkowski rejected any effort to add to his own committee’s bill, saying, “They are not going to amend the Ways and Means Committee bill. If I allowed that to happen, I would have to allow everybody to offer amendments.”

Collapse of Bill Seen

Rostenkowski argued that any move to reopen the bill, which was painfully worked out in a series of delicate compromises with panel members intent on preserving certain tax breaks for local constituencies, would risk its collapse.

“I don’t know how I would defend against all the demands,” he said. “I don’t ever want to take that back to the committee again.”

Negotiators, however, remained trapped Friday because House Republicans insisted they would not cooperate with Reagan unless they were first promised a change in the rule that would allow a separate vote on their amendment.

“I can’t give a firm commitment on numbers,” House Minority Leader Robert H. Michel (R-Ill.) said, “until I get a firm commitment on the rule.”

The Republican amendment would drastically curtail the deduction for personal interest payments to allow all taxpayers to claim a full $2,000 personal exemption for themselves and each family member.

Exemptions Differ

Under the Ways and Means bill, the current $1,040 personal exemption would be boosted to $2,000 for the majority of taxpayers who do not itemize deductions, although itemizers would be limited, in effect, to personal exemptions of $1,500. Interest would remain deductible for second homes and for consumer interest expenses of at least $20,000.

Republicans are also demanding that Democrats go along with a move to delay putting the tax bill into effect until 1987, and Democrats are likely to accept such a step, according to Rep. Robert T. Matsui (D-Sacramento), a member of the Ways and Means panel.

As now written, most provisions of the legislation would take effect Jan. 1, 1986--even though, under the best of circumstances, any final action on the bill by both the House and Senate is not expected until next summer.

Earlier this week, Senate Majority Leader Bob Dole (R-Kan.) said he would move to postpone the general effective date of any tax revision plan to Jan. 1, 1987, if it reaches the Senate.

“It is unfair,” Dole wrote in a letter to Michel, to require taxpayers to “second-guess Congress on issues of such importance to our economy.”

Postponement Sought

Increasingly, other lawmakers also were talking about putting off the tax bill in the House until next year--a move that many of them would have once considered a death sentence for tax revision.

“I don’t ever look at this bill as dead,” Rostenkowski said, “and I don’t see the President giving up on it at all, no matter what happens this year.”