The need for new taxes
With budget deficits now projected to soar to historic levels during the next several years, President Reagan must move vigorously in seeking new taxes. The demands for additional federal revenues are no longer confined just to the Democratic opposition. Indeed, House Republican leaders now are joining their colleagues in the Senate in seeking tax measures which, coupled with additional budget cuts, will help hold annual federal deficits below the $100 billion range.
A look at past history may be in order here. Throughout his public career Mr. Reagan has skillfully found ways of boosting revenues when needed. When he was governor of California state taxes rose steadily, climbing from $3.8 billion in 1966-1967 to $7.6 billion in 1973-1974. So now that a phalanx of key economic advisers close to the President suggests that more taxes will be needed in 1983 and 1984 it becomes more likely that Mr. Reagan will seek the hikes.
In finally joining those calling for tax increases, Treasury Secretary Donald Regan becomes crucial to the formulation of the specific tax packages that can be expected. He is known to be increasingly concerned about the impact of the deficits on Wall Street. The size of those deficits and the need for substantial Treasury borrowing were two principal reasons for the prediction of market analyst Henry Kaufman recently that interest rates would climb again in the second half of 1982.
Mr. Reagan has apparently decided not to change the 10 percent personal income tax cuts scheduled to take effect this year and next. Thus, he need not feel that he would be violating the spirit or intent of earlier avowals by opting for excise or other tax measures for 1983 or 1984. Earlier presidents have had to make similar about-faces as economic conditions changed. We imagine that the American public would welcome the candor and responsibility inherent in such a decision.
The ''revenue enhancement'' measures now being discussed in the administration all seem reasonable enough, i.e., closing some loopholes, stepping up the government's debt-collection system, and imposing new excise taxes on such consumer products as alcohol, tobacco, and gasoline. The gasoline tax is now 4 cents a gallon. Doubling that could add on the order of $2.5 billion to federal coffers. Similarly, the tax on a package of cigarettes is 8 cents and on a pint of beer 3.6 cents. Doubling these ''sin taxes'' would bring in another $5.2 billion.
Still, while increasing such taxes will help cover soaring deficits, it must not be ignored that consumer taxes tend to hit hardest at lower-income Americans , since they have less to spend for such goods. Nor will such taxes produce the large revenue increases that may be needed. For that reason the President should rethink his opposition to a windfall profits tax on natural gas production. It is expected that Mr. Reagan will call for deregulation this year. Taxes on newly decontrolled gas could bring in as much as $10 billion to $20 billion. There is also something to be said for the argument of Oklahoma Democratic Congressman James Jones that excise taxes be placed on such ''luxury'' items as expensive cars and coats so that the affluent will share equitably in the new tax load.
Finally, while it is to their credit that they are now considering appropriate new tax hikes, the White House and Treasury are still remiss in not seeking to control the whole broad range of ''tax expenditures'' - revenue losses - that tend to favor the affluent members of society and cost the government over $265 billion annually.
By not taking up the banner on closing such loopholes, the administration continues to ignore a potentially far-reaching way of reducing the very deficits that it - and Wall Street - most dread.