President’s Appeal Ends Tax Impasse : Trip to Capitol Hill Success; Democrats Agree to Early Vote

President Reagan, making an unusual pilgrimage to Capitol Hill to appeal to House Republicans to save his tax overhaul crusade, won enough converts to break the impasse over the tax bill Monday and Democrats agreed to a vote on the bill that could take place as early as today.

“We’ll be on the floor on tax reform tomorrow,” House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) said Monday night. “We’ve won a big one.”

The breakthrough came earlier in the evening when Administration strategists finally persuaded enough Republicans to support the bill drafted by the Democratic-controlled Ways and Means Committee to make House passage likely for a sweeping revision of the nation’s tax code.

Minimum Number

“We’ve got 50 (Republican) votes for the bill,” said Secretary of the Treasury James A. Baker III, referring to the minimum number of GOP votes demanded by Democratic leaders.

House Speaker Thomas P. (Tip) O’Neill Jr. (D-Mass.) agreed to speed action by the House Rules Committee, which agreed by a unanimous voice vote late Monday night to accept a minor change in the procedures under which the House will vote on the bill approved by the Ways and Means Committee and allow a vote on an amended version of a Republican alternative that is given little chance of winning.

In a brief conversation with Reagan, a Democratic aide said, O’Neill warned the President that because of Democratic defections he might need slightly more than 50 GOP votes to assure passage of the bill.

Strenuous Opposition

The White House, in an 11th-hour lobbying blitz, overcame strenuous opposition from most House GOP leaders by promising that Reagan would not sign the bill drafted by the Democratic-controlled Ways and Means Committee unless it is significantly changed by the Senate.

Last week, House Republicans led a revolt against Reagan’s tax revision effort, engineering a 223-202 vote that prevented consideration of the bill. Only 14 Republicans backed Reagan.

But on Monday, during a 50-minute session with House Republicans, Reagan said he would veto any tax revision bill that might emerge from Congress next year if it does not increase the current $1,040 personal exemption to $2,000 for all taxpayers, lower the top personal rate to 35% and keep the capital gains tax from rising, House GOP aides said.

While such promises may have been the key to picking up Republican votes badly needed to clear the bill’s first hurdle, Reagan may simply be putting off until next year a confrontation with Congress over the top domestic priority of his second term.

Senate Finance Committee Chairman Bob Packwood (R-Ore.) has said repeatedly that his committee is unlikely to make major changes in the House bill, if and when it considers tax-revision legislation next year.

Web of Trade-Offs

The bill engineered by Rostenkowski was a web of delicate political trade-offs. His concession to save the existing deduction for state and local taxes and pick up support from large-state congressmen, for example, made it impossible for the bill to lower rates as much as Reagan had initially demanded.

Called ‘Anti-Family’

The Ways and Means Committee bill also would raise the personal exemption to $2,000 only for the majority of taxpayers who take the standard deduction, effectively limiting the increase to $1,500 for those who itemize. Reagan had proposed a $2,000 exemption for all taxpayers, and House Republicans said the committee’s lower proposal was “anti-family.”

The bill also calls for a top individual tax rate of 38% and would raise the capital gains rate slightly.

As part of the agreement between the White House and House Republicans, the House also would be asked to vote on a non-binding resolution urging postponement of most major tax changes until Jan. 1, 1987. Republicans had said the delay was needed to help businesses and individuals adjust to the new law. The Democratic bill has many different effective dates.

Seen as Breakthrough

Democrats said the relatively minor concessions gained by the Republicans probably would not seriously affect their support and welcomed the agreement as a breakthrough.

“The gates are open. We’ve been waiting for a long time,” one top Democratic aide said.

The settlement emerged after House Republicans took Reagan to task behind closed doors, blasting his Administration for ignoring their concerns that the bill would harm the economy.

“That bill is a skunk,” complained Rep. Tom Loeffler (R-Tex.) about the Democratic tax revision plan, and “if you move it over there (to the Republican-controlled Senate), there’s no way you’ll change the odor.”

“We want to be for tax reform, but this ain’t it,” California Rep. Ed Zschau (R-Los Altos) said, referring to statements he heard from many Republicans.

Open to Persuasion

But other Republicans said they were open to persuasion by Reagan. “I’m reconsidering,” said Rep. John McCain (R-Ariz.). “I’m willing to listen to what the President has to offer.”

Personal Appeal

Although most Republican leaders said they will still vote against the bill, the active opposition by top GOP lawmakers that defeated an effort last week to allow a vote appeared to vanish after Reagan issued his unusual personal appeal.

At a news conference after the meeting, Republicans attempted to shift the blame for the tax bill’s troubles to Democrats, arguing that House leaders were preventing a compromise that would allow Republicans to introduce their own amendment to expand the $2,000 personal exemption to all taxpayers.