Packwood Vows to Resist Changes in Tax Plan

Senate Finance Committee Chairman Bob Packwood (R-Ore.) vowed Thursday to propose no changes in the tax overhaul bill approved earlier this month by his committee and said that he has pledges from 31 members to resist any amendments to the package on the Senate floor.

“There will be no Packwood-Dole cleanup amendments,” Packwood told a room filled with supporters that resembled a revival meeting in its fervent pledges of support for the package. “Do not believe anything you hear about a committee amendment.”

Dole Leaves Door Open

Senate Majority Leader Bob Dole (R-Kan.), however, has not ruled out accepting some modifications to the committee’s proposal, staff members said, if that is necessary to hold together a majority for the bill.

Although Dole plans initially to resist any new proposals, he is still open to at least a minor change in the rules affecting individual retirement accounts, for example, if senators now on recess return from their districts next week demanding such changes as the price for supporting the bill.

Under the Finance Committee bill, contributions to IRAs no longer would be deductible for taxpayers who have a company pension plan, although earnings in an IRA account would remain tax-free until withdrawn.

Staff members also confirmed that the Senate bill would boost tax revenues considerably in the first years and lose revenue later on. During this year, in which the investment tax credit would be repealed retroactively to Jan. 1, the bill would raise an estimated $7.4 billion, while in 1987, when several tax preferences would be eliminated before rates are reduced on July 1, the proposal would increase revenues by about $23 billion.

Over a five-year period, however, the proposal would raise about the same in tax revenues as current law.

‘15/27/33 Coalition’

The meeting was called by the “15/27/33 Coalition,” which represents more than 600 interest groups and business organizations that support the committee bill. The two personal tax rates in the bill are set at 15% and 27%, with the corporate rate pegged at 33%.

While vowing to “stand firm” against any amendments on the Senate floor, Packwood acknowledged that he would seek several changes if the bill is approved by the Senate and goes to a conference with House members to work out differences between the two tax overhaul plans.

Packwood said there are “many good things in the House bill,” and indicated that he would not carry any “institutional pride of authorship” into the conference. He suggested, though, that he expects to win approval for eliminating deductions for state sales taxes, as proposed in the Senate bill. The House bill, which was adopted last year, retained all current deductions for state and local taxes.