Contending tax bills: how 'sweet' they are
Gone is President Reagan's hope of forging a "clean" tax-cut bill, designed to free a lot of upper-income money for investment in new jobs and higher productivity.
That spare design -- based on a 30 percent, across-the-board income tax cut over three years, plus accelerated depreciation for business -- would have had none of the "sweeteners" that now adorn the President's favored bill.
Such sweeteners include tax relief for some oil producers, reduction of the "marriage penalty" for two-earner couples, indexing to eliminate "bracket creep, " effective elimination of most estate taxes, and others.
Earlier, Mr. Reagan and aides had wanted no such items in this year's tax bill -- not because they disliked the items as such, but because they would cut US Treasury revenues and militate against the investment rationale of the "clean" tax-cut bill.
That rationale was based on a concept that Democrats could not accept -- that the rich should get more tax relief, because they had more money to invest.
Rich people, according to the supply-side economists who have the President's ear, would save and invest most of their massive tax savings, thus making more money available for mortgages, auto loans, and other aids to battered industries.
House Democratic leaders challenged the whole concept on three scores:
* The economic reasoning behind the President's program, Democrats contend, is faulty, or at least risky.A massive income tax cut, these critics say, is likely to spur consumption and add to inflationary pressures.
* Loss of tax revenues would make it harder to balance the federal budget by 1984, which is Reagan's goal.
"If things do not work out [as the White House expects]," says Rep. James R. Jones (D) of Oklahoma, chairman of the House Budget Committee, "you have in place a mechanism for growing budget deficits."
* The White House tax program is inequitable, favoring the well-to-do.
When the Democratic alternative tax plan emerged from the House Ways and Means Committee, chaired by Rep. Dan Rostenkowski (D) of Illinois, tax relief was centered on "middle class" Americans, earnings $15,000 to $50,000.