Packwood Stalls Vote on Troubled Tax Bill

Senate Finance Committee Chairman Bob Packwood (R-Ore.), acknowledging that tax revision is in danger of being suffocated to death in his committee, canceled Friday’s legislative drafting session and said that back room negotiations would begin next week to revive the bill.

“I just did not want to run a risk of killing this bill by going ahead,” Packwood said. “The way we’re going, if those votes are thrown away today, we’ve thrown away any chance of tax reform at all.”

Packwood’s action raised fresh doubts about the prospects for President Reagan’s top domestic legislative priority. But the White House expressed support for the decision.

“We understand that he’s trying to do what he can to produce a bill that comes somewhat close to the President’s criteria,” said White House spokesman Larry Speakes. Asked whether the development was a serious setback, Speakes replied: “We think it’s still important that we have tax reform.”

Deductions on Agenda

The committee was scheduled to act Friday on Packwood’s proposal to trim part of the federal income tax deduction for state and local tax payments, but supporters of keeping the deduction intact said they had the votes to defeat the change. The panel also was expected to resist efforts to pare business deductions for meals and entertainment.

Packwood confessed that he would have lost at least three costly votes on individual tax preferences. That would have put the panel billions of dollars further away from the goal of revising the tax code to bring down rates and prune tax breaks--without widening the federal budget deficit.

Since the committee began drafting its tax bill last month, most members consistently have voted to maintain existing tax preferences. Their actions would cost the Treasury about $29 billion over five years compared with Packwood’s original proposal, which would have raised as much revenue as existing law.

Several senators urged that work on the bill continue but it was clear that Packwood, in his first term as chairman of the committee, still is unable to eliminate business and individual tax breaks that are valued by powerful interest groups.

‘Join the Crowd’

“This is not an arena where a high premium is placed on chastity,” remarked Sen. John H. Chafee (R-R.I.). “There’s a tendency on the part of all of us to join the crowd” in protecting one special interest group or another, he said.

Nonetheless, senior members said that some kind of tax overhaul plan ultimately would emerge. “Tax bills have a life of their own,” said Majority Leader Bob Dole (R-Kan.), a committee member. “I think we’ll get a tax reform bill out of this committee. It may not be simplification, but no one has talked about that in six months.”

Administration officials at the session also urged Packwood to continue. “This process very clearly should go forward,” said Roger Mentz, assistant Treasury secretary for tax policy.

But even though the Democratic-controlled House approved a tax bill last December, a few members urged Packwood to give up the struggle to write his own version. “This is a horse that is so lame,” said Sen. David Pryor (D-Ark.), “that I don’t think we can continue riding it.”

Some Still Interested

Packwood insisted that about 15 of the 20 senators on the panel remain interested in putting together a tax revision package. “We will get it back on track,” he vowed, telling members that he is considering locking them in a private “room without windows, without doors,” for as long as it would take to thrash out a deal.

Packwood said he is prepared to postpone public decisions next week on the detailed tax provisions “so members can talk privately to see if we want a bill.”

Sen. Bill Bradley (D-N.J.), a relatively lonely voice on the committee calling for major sacrifices to drastically overhaul the tax code, said the panel is close to “the day of reckoning.”

“We know what the price is,” Bradley said, “and now we have to decide whether to pay it.”

Focus on Big Issues

Like several members of the committee, Bradley suggested that it might be better to drop many of the complex proposals from the bill and to focus on bigger issues with large price tags.

One committee staff member, who spoke only on condition he not be identified, argued that Packwood’s move offered the best hope of breaking the logjam on the panel.

“Nobody is willing to give up anything until everybody is prepared to sacrifice something,” he said. “But I’m not sure it will work on this committee.”