Panel in Split as Democrats Seek New Tax Sources

Times Staff Writer

House Republicans Wednesday bowed out of the search for new taxes to meet the Gramm-Rudman law's deficit-reduction targets, leaving Democrats on the Ways and Means Committee to begin trying cautiously to come up with a tax package on their own.

At the end of their first day of exploring their tax options, the committee Democrats had agreed on taxes producing little more than half the $12 billion they need. They put off decisions on the most controversial proposals, such as requiring all state and local employees to pay Medicare payroll taxes.

Committee Democrats will meet again today to try to consider other ways to generate revenues, including measures that were proposed by the Reagan Administration and rejected by Congress during last year's tax-overhaul effort.

Panel May Still Balk

However, it does not appear likely that the panel will find any of those proposals more attractive than they did last year.

"I'm not comfortable about doing it," Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) said of the prospect of bringing a tax package to the House floor with no GOP support. "But I don't have the luxury of waiting." He conceded that the proposal's chances would be dicey.

President Reagan has promised to veto any bill raising taxes beyond the $6 billion proposed in his own budget. However, if Congress cannot meet Gramm-Rudman's $23-billion deficit-reduction target, the President would face the choice of allowing those taxes or implementing that law's automatic spending cuts that would slash military spending and domestic programs equally.

The committee Democrats agreed on relatively non-controversial tax proposals that would raise $6.3 billion this year, and $20.7 billion over the next three years. Most had been suggested in President Reagan's budget.

Those taxes include extending for three years the current 3% telephone excise tax, which is scheduled to expire at the end of this year.

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