House Team Backs Jan. 1 Tax Cut Start

House negotiators united today behind a demand that individual tax rates be slashed next Jan. 1, six months ahead of the schedule in the bills approved by the House and Senate.

“There is a lot of concern about” the fact the rate cuts would come after deductions are reduced or eliminated, Rep. Don J. Pease (D-Ohio), told reporters. The concern, he added, is about “actual fairness, perceived fairness and from the viewpoint of the economy.”

“The economy is a little fragile these days,” Pease said, and delaying the individual tax reductions “could adversely affect the economy.”

Senate and House conferees met separately in closed sessions today and planned to meet as a conference meeting later in the day. Five days into their work, the negotiators have yet to make the first decision about what will go into the final tax-overhaul plan.

Low Rate Starting Point

Rep. Dan Rostenkowski (D-Ill.), chairman of the conference, predicted one of the first decisions by the lawmakers would be to use the lower individual tax rates in the Senate bill as a starting point for writing a compromise. However, he indicated House members will insist on raising the Senate rates if that is necessary to provide adequate tax relief for middle-income people.

Both bills being considered by the conference committee would sharply reduce individual and corporate tax rates and take away or reduce some deductions and exclusions. The Senate version would mean lower rates and fewer deductions than would the House bill; the House plan would impose a bigger burden on corporations and produce bigger individual tax reductions.

15% for Most People

For individuals, the House bill would have a top rate of 38%, compared with 50% under existing law. Like the House bill, the Senate measure would tax most people at a 15% rate. Most other taxpayers would pay a 27% rate.