Packwood Would Fight Adding a Higher Tax Rate for Wealthy

The Republican architect of Senate tax overhaul legislation said Sunday that he firmly opposes any revision of the plan that would raise income tax rates for the wealthy, a stand that could complicate efforts to iron out partisan differences over the package as it is debated in the chamber this week.

Oregon Sen. Bob Packwood, who chairs the Senate’s Finance Committee, said in an interview on the CBS program “Face the Nation” that he would resist all efforts to tinker with the two-tier tax structure that he crafted by adding a third, higher rate for upper-income taxpayers.

‘Holds Bill Together’

“The absolute glue that holds this bill together is the rates, 15% for roughly 85% of the Americans, 27% for the rest,” Packwood said. “ . . . I will not consider raising the rates . . . . “

The present tax code applies a scale of gradually escalating rates as income rises, while the Packwood proposal would exempt many low-income wage earners from any federal tax burden and apply the 27% levy to income above $17,600 earned by individuals or $29,300 for married couples. Corporate income would be taxed at 33%.

The House version envisions four rates for individuals, starting at 15% for those with modest salaries and rising by income steps to 25%, 35% and 38% as the top rate.

While the concept of streamlining the tax code retains widespread appeal in the Senate, many lawmakers want to tinker with the plan--some to restore prized deductions axed by Packwood, others to increase overall revenue as a hedge against the bulging federal budget deficit. Packwood has resisted amendments, contending they would whet demands for further changes that could undermine the principle of tax revision.

Fight on IRAs Vowed

Several senators have vowed to fight the controversial treatment of individual retirement accounts in the Packwood plan. The bill no longer would permit taxpayers to subtract from taxable income their IRA contributions when they are covered by company pension plans.

Interviewed on the same program as Packwood, Sen. George J. Mitchell (D-Me.) said he would lead a fight on the Senate floor to create a third tax bracket for the rich and use the added revenue to bankroll extra tax breaks for the middle class.