50 Senators Warn Reagan on Tax Plan : Send Letter That Urges Action on ’87 Budget First

Half the members of the Senate today signed a letter to President Reagan saying they want to see action on the budget before work goes ahead on tax-overhaul legislation that the President has made his top domestic legislative priority.

“Mr. President, we feel that you must join with the Senate and House leadership to develop a consensus on the fiscal year 1987 budget resolution.

“Therefore, until a firm, definite budget agreement has been reached between Congress and the White House, we do not believe tax reform should be considered or debated by the United States Senate,” said the letter signed by 37 Republicans and 13 Democrats. Seven signers are members of the Senate Finance Committee, where the tax bill is pending.

Compromise Sought

The letter was being sent to Reagan the day before Senate budget writers begin their struggle to piece together a fiscal 1987 spending plan.

Sen. Rudy Boschwitz (R-Minn.), who led the drive to get signatures for the letter, said the effort was aimed at forcing an early compromise this year on the budget.

“This is perhaps the most significant budget that most of us have ever been involved with,” he said.

The letter, however, also complicates Reagan’s drive to gain congressional passage of a tax-overhaul bill this year.

It also indicates a rising interest in turning to increased taxes, which the President has opposed, as a way to reduce deficits.

Some legislators are expressing interest in a tax amnesty proposal as a way to raise revenues without violating Reagan’s prohibition on a general tax increase.

Additional Revenue

The idea could raise as much as an additional $25 billion for the government, according to a document prepared by Senate Budget Committee aides.

“People want revenues but don’t want any new taxes, so amnesty is gaining strength,” said Senate budget panel Chairman Pete V. Domenici (R-N.M.).

Sen. Lawton Chiles of Florida, the top Democrat on the panel, said, “The more people look at the numbers and see what you have to do . . . the more people are saying, ‘How can we do it and it not be new taxes?’ ”

At least on paper, amnesty looks like a way to increase revenues without putting a new tax on the books.

Amnesty Opposed

However, Roscoe L. Egger Jr., commissioner of the Internal Revenue Service, told a House Ways and Means subcommittee today that he has not changed his long-held opposition to amnesty. He said he fears such a plan would set a dangerous precedent that could be resented by honest taxpayers as a special break for cheats.

Egger questioned estimates that amnesty would produce billions of dollars. “We have been unable to pin down any estimate I think is fully reliable,” he said. IRS checks have determined that many of the people who have taken advantage of a state amnesty program are already paying taxes to the federal government, he added.