Tax Writer Ends Talk of Rate Hike : Rostenkowski Backs Off Talk of Tax Increase

Rep. Dan Rostenkowski, chief tax writer in the House, backed away today from his call for higher income-tax rates to reduce the federal budget deficit while his Senate counterpart raised the possibility of eliminating more deductions.

“I don’t anticipate us raising the rates,” Rostenkowski (D-Ill.), chairman of the House Ways and Means Committee, told a tax conference sponsored by Price Waterhouse accountants. If more revenues are needed to cut the deficit, they probably would come from higher taxes on alcohol, gasoline and tobacco, he said.

Sen. Bob Packwood (R-Ore.), chairman of the Senate Finance Committee, told the same conference that if a revenue increase is necessary next year, “we’ll do it again not by raising the rates but by broadening the base.” That is government jargon for eliminating or reducing tax deductions, exclusions and credits.

At the White House, President Reagan repeated his opposition to raising income-tax rates once the big tax-overhaul plan pending in Congress becomes law.

“There’s been some talk that once our tax reform is in place, the rates would be raised to pay for more spending,” he said at a Rose Garden ceremony. “That would be an intolerable breach of faith with the American people. We didn’t achieve this historic tax reform to have it undermined by the big taxers.”

Invited to Conference

Rostenkowski and Packwood were invited to the Price Waterhouse conference, which was carried via satellite to guests in 50 cities, to talk about the big tax-overhaul bill pending in Congress.

They said they expect the 2,000-page compromise bill to be filed by Thursday, which would allow the House to pass it next week and the Senate to finish it before Congress adjourns around Oct. 3.

Both chairmen said they would like to think that Congress will consider no significant new tax legislation next year, although they conceded that there almost certainly will have to be a bill correcting drafting errors in this year’s measure.

They were asked whether there was any chance the far-reaching bill will have to be changed next year because of a weak economy.

“I would have to be convinced the bill itself was responsible for a downturn,” Rostenkowski said. “If that were true, we would take a look at it. But, boy, it would take a lot of convincing.”

Reminded of Suggestion

Roscoe L. Egger Jr., former Internal Revenue Service commissioner who now is a partner with Price Waterhouse, reminded Rostenkowski that only last month he had suggested raising the tax rates in the overhaul bill to fight the deficit.

“I just think the rate structure is more progressive if you are going to increase taxes,” Rostenkowski said, adding that he would expect to see no tax increase unless Reagan abandons his opposition.

“I would like to shake a few timbers at 1600 Pennsylvania Ave.” and make the Reagan Administration understand there is a deficit problem, the lawmaker added.

“I don’t envision going back to the (income-tax) rates,” Rostenkowski said, “but I am a team player” and the House leadership has advised him that his committee should be looking for ways to raise revenue.