Reagan Wants Tax Bill Left Intact, Backs Limit on IRAs

President Reagan, meeting with members of the Senate Finance Committee, Tuesday urged lawmakers to resist any changes in the major tax overhaul bill approved by the panel earlier this month and endorsed the package’s elimination of the tax deduction for IRA contributions by individuals already covered by company pensions.

Reagan’s strategy to win approval in the Senate next month, White House spokesman Larry Speakes said, is to protect the bill from being “whittled away by special interests” by opposing nearly all amendments to restore tax breaks that might threaten the drastically lower individual and corporate tax rates called for in the measure.

Speakes added that Reagan considers the severe cutback in the IRA tax preference, which would raise about $30 billion over five years, “an important part of the package.”

Would Slash Rates

Under the Finance Committee package, approved in a dramatic turnaround by the panel on a 20-0 vote after an earlier version hit a dead end, the top individual tax rate would be slashed to 27% from the current 50% and the maximum corporate rate would drop to 33% from 46%.

The rates would be cut by eliminating several existing individual tax breaks and shifting an average of about $22 billion a year in the tax burden from individuals to corporations.

Sen. John H. Chafee (R-R.I.) told reporters after the meeting that Reagan supports the bill “wholeheartedly and urges us to go out there and resist amendments on (the Senate) floor and produce just what we did in the committee.”

Although the Senate floor is a traditional haven for interest groups seeking tax breaks, Sen. Bill Bradley (D-N.J.), a key advocate of tax revision for several years, acknowledged that the bill’s success hinges on defeating all proposed changes to the package.

Fears Flood of Amendments

“As soon as you (approve) an amendment,” Bradley said after the meeting, “that opens the floodgates and then you have a gush of amendments and . . . a bill quite different from this one.”

But a few members who voted for the bill in committee expressed some misgivings about certain aspects of the package and vowed to press for changes when Senate debate begins shortly after lawmakers return from a Memorial Day vacation next week.

Sen. William V. Roth Jr. (R-Del.) said he will offer an amendment to restore the full deduction for individual retirement accounts, and Sen. George J. Mitchell (D-Me.) promised to seek a higher maximum tax rate for wealthy taxpayers.

Opponents of the tax bill, meanwhile, began gearing up for the uphill struggle.

The National Assn. of Homebuilders, objecting to the committee’s hasty action in approving the bill, urged the Senate to delay consideration for at least 30 days, arguing that the plan hits too hard at tax preferences for investment in real estate.

Dropping Poor Opposed

In the most unusual objection yet to tax overhaul, Howard Phillips, who heads the Conservative Caucus, condemned the bill for eliminating income tax payments for about 6 million poor taxpayers. All versions of tax revision, beginning with the Treasury Department’s plan of November, 1984, have been aimed at removing millions of poor taxpayers from the income tax rolls because their overall tax burden has increased in the last decade far more than other individuals.

But in a twist on a slogan from the American Revolution, Phillips argued that the poor should pay income taxes because “no representation without taxation is a fair standard.”

At the same time, some doubts were expressed by tax analysts over whether the bill will actually raise as much in revenues as the current tax code. With many details of the bill still being drafted by aides, congressional tax staff members have not yet disclosed the specific revenue estimates for the various provisions of the package.

“The claim that (the bill) will be revenue neutral deeply disturbs us,” Gerard Brannon and R. Eliot Rosen, top editors of the respected trade publication “Tax Notes” wrote this week. “We feel like the audience at a magic show. We are dazzled at how much rate reduction there is while so many of the solid reforms of (earlier tax revision packages) have been dropped.”

Times staff writer Doyle McManus contributed to this story.