Senate to Try Again After House Rebuffs Tax Plan

Senate tax negotiators, their first offer caustically rebuffed by their House counterparts during a closed meeting Monday, promised to return today with a five-year, $30-billion package that would permit little more than minor adjustments to the Senate bill.

Senate Finance Committee Chairman Bob Packwood (R-Ore.) said that his bargaining team would be reluctant to go any further in curbing tax deductions but left open the possibility of other changes to end the six-month delay in cutting tax rates proposed in both House and Senate tax revision plans.

$30 Billion Not Enough

But House Ways and Means Chairman Dan Rostenkowski (D-Ill.) indicated that the $30 billion in added federal revenue would not go far enough to satisfy all the changes House negotiators want, because the bulk of it would be used just to ensure that the bill would not widen the federal deficit.

“Does that conclude all negotiations?” Rostenkowski wondered about the Senate’s pending offer. “I don’t think we’re going to accept that.”

Tax negotiators, trying to resolve the differences between their two bills before Congress is scheduled to recess on Aug. 15, spent most of the day in tactical maneuvers but made little real progress on the hundreds of detailed changes necessary to approve a final tax revision package.

“We just don’t want to go very far (in boosting corporate taxes),” Sen. John H. Chafee (R-R.I.) said. Once they come up with the $30 billion or so, Chafee said, Senate conferees want to be assured that House negotiators do not keep piling on further demands to increase business taxes. “The Senate,” he added, “just doesn’t want to be confronted with a constantly moving target.”

Picks Up House Proposals

Unlike the Senate’s weekend proposal, which would have increased revenues by $26 billion--much of it from sources suggested by the Reagan Administration but not proposed by either legislative body--the new proposal would consist largely of items already accepted by the House, Packwood assured reporters.

Beyond that point, however, Packwood left little room for bargaining.

“It’s going to be a package deal,” he told reporters, “and we will say this is all we want to spend to pay for all the differences we have.”

Several items in the Senate’s first offer, presented Saturday, appear to be acceptable to House negotiators. Those include limiting the 25% research and development tax credit to three years, taxing public utilities and multinational corporations more heavily and curbing the use of tax-exempt bonds for private purposes.

But most of the proposal, totaling about $14 billion, initially was rejected. House members were particularly scornful of the proposal to impose a 5% surcharge on tax-exempt income for many affluent taxpayers and a plan to “save” $3 billion by artificially making sales tax tables more generous just before eliminating them for most taxpayers.