Senator Stalls Panel Vote on Tax Overhaul : Chairman of Finance Committee Feared Bill Would Be Killed

The chairman of the Senate Finance Committee abruptly suspended action on income-tax overhaul today after it became clear that he would be defeated on key provisions, including his plan to repeal part of the deduction for state and local taxes.

“I did not want to run the risk of killing this bill by going ahead” with the votes, Sen. Bob Packwood (R-Ore.) told reporters. He did not indicate when work might be resumed, although it could be as early as Tuesday.

The decision, following an earlier string of committee votes to continue special tax breaks, raised serious doubts about whether the panel will be able to agree this year on any kind of sweeping tax overhaul that would be acceptable to President Reagan.

Top Reagan Priority

Reagan has made a new tax system--one based on lower tax rates and fewer deductions and exemptions--the top legislative priority of his second term. One of his basic demands is that the new system bring in the same money as present law.

But during 11 days of work on the bill, the committee voted consistently against Reagan’s proposals to scale back or eliminate special benefits for business. Over five years, those votes would mean the loss $30 billion more in tax revenues than would occur under Packwood’s plan, which is modeled after Reagan’s.

If it continues to preserve special tax breaks, the committee will have to find new revenue sources to make the bill come out even--and it has yet to display any enthusiasm for doing that.

Votes Scheduled Today

Packwood had scheduled votes for today on several individual tax provisions that would save about $100 billion over five years. Heading the list were his plans to reduce the deduction permitted for taxes paid to state and local governments and to limit the write-off allowed for business meals and entertainment--the fabled “three-martini lunch.”