President Carter has rejected a proposal by a cabinet-level task force that he withdraw his present plan to phase out a controversial $1.1 billion tax subsidy for U.S. exporters and instead merely revamp it to shift benefits to smaller corporations.
In an initial decision, the president told task force members they could suggest possible alternatives in a report due out soon on U.S. export policy, but said he would not alter his current opposition to the present export tax break.
The decision marked a victory for the White House domestic policy staff, which had vigorously objected to any turnabout in Carter's previous stand on the issue. The Georgian had promised during the 1976 presidential campaign to propose outright repeal of the export break.
The proposal to revamp the present tax subsidy rather than repeal it outright had been backed by Treasury Secretary W. Michael Blumenthal and Commerce Secretary Juanita M. Kreps. The existing program is known informally as DISC - for domestic international sales corporation.
The task force proposal would have limited the use of the DISC tax break to 4 per cent of a company's exports, and would have provided a proportionally larger writeoff for smaller companies which are only just now entering the export market.
At present, all companies which set up domestic international sales corporations are eligible for the same break. The law provides for virtually indefinite deferral of taxes owed on a portion of the earnings from these dummy corporations.
Despite the internal flap about the task force proposal, Carter's decision may not matter much anyway. Congress so far has shown no visible willingness to change the DISC program no matter what the president proposed. The earlier Carter recommendation has been regarded as dead.
Sources said the proposed to revamp the DISC subsidy along the lines the task force originally proposed most likely would be included in its final report, which is due out within two or three weeks. However, one source said, it will be downgraded to one of several possibilities.