Reagan Warns Someone’s Going to Have to Explain if 27% Tax Rate Bill Loses

President Reagan signaled House Democrats today that “somebody’s going to have to do a lot of explaining” if Congress adopts a top individual income tax rate higher than the 27% level approved by the Senate.

Portraying himself as siding with “the people’s interest against the special interests,” Reagan said a sweeping overhaul of the income tax system would demonstrate that lobbyists’ “fancy briefing papers and expense account lunches were no match for the will of the people.”

Reagan flew to the southeastern corner of Alabama today to urge tax changes in a luncheon speech before the Chamber of Commerce in Dothan, a community of 52,000 people that proclaims itself the peanut capital of the world.

Thousands of people lined the streets in the hot sun and cheered and waved to Reagan as his armored limousine rode into town. The President also got a long ovation from the crowd of more than 1,600 at the lunch of fried chicken and mashed potatoes in the balloon-bedecked civic center.

In his speech, Reagan outlined the approaching closing debate between House and Senate negotiators over the final shape of the tax overhaul he has sought for 2 1/2 years.

300 Differences in Bills

Taking sides on the most fundamental of about 300 differences between the separate tax bills passed by the Senate and House, Reagan formally endorsed the new, lower tax rates contained in the Senate bill, which House Democrats say favors the wealthy at the expense of the middle class.

“Let there be any significant departure from the two low individual rates, of 15% and 27%, and the top corporate rate of 33% that the Senate has already approved, and somebody’s going to have to do a lot of explaining,” Reagan said.

Reagan, in his own original tax proposal, had called for reducing the present top individual rate of 50% to 35% while narrowing the number of brackets from 14 to four.

A senior White House official said Administration strategists are confident that House conferees, led by Democrats, will give up the 38% top individual rate adopted by that body rather than try to explain in an election year why they supported higher tax rates than the Senate.

The conference will convene for the first time next week in an effort to complete work on the tax bill by Labor Day.

Flexible on Other Issues

The official said Republican campaigners could put supporters of the higher House-passed rates on the defensive simply by pointing to the numbers.

On other controversial differences between the House and Senate, Reagan indicated that the Administration will remain flexible, while trying to protect some special interests, including farmers and oil producers who “already have tough enough times as a result of forces beyond their control.”

“To help families and individuals alike, I hope to see the conference increase the personal exemption to $2,000 except for the very richest taxpayers,” Reagan said. “This is vital.”

By taking an estimated 6 million low-income Americans off the tax rolls, Reagan said such a provision “would represent perhaps the biggest anti-poverty program in our history.”