The Carter administration failed yesterday in a last-minute effort to reach agreement on a compromise tax plan that would steer the White House from its collision course with Congress over a proposed reduction in the capital gains tax.
The latest administration failure came as the House Ways and Means Committee prepared to begin hearings today on a $15 billion tax cut package that includes a reduction in the capital gains tax from 49 to 35 percent.
The tax bill, first proposed by Rep. James Jones [WORD ILLEGIBLE] is being co-sponsored by Ways and Means Chairman Al Ullman [WORD ILLEGIBLE] and Rep. Barber Conable [WORD ILLEGIBLE] ranking Republican on the committee.
President Carter has threatened publicly to veto the proposal because of the capital gains reduction, which he calls a "windfall for millionaires."
In recent weeks, however, Treasury Secretary W. Michael Blumenthal has been trying to work out a compromise with Ullman and other congressional leaders on legislation that would reduce the capital gains tax to 39 percent and provide extra relief for home owners.
Blumenthal met with congressional leaders Tuesday night and basically repeated the White House compromise offer that would have limited the overall revenues loss from the capital gains reduction to $600 million. The proposal before the Ways and Means Committee would cost $1.1 billion.
The congressional leaders tentatively were scheduled to meet with Carter yesterday at the White House for further discussions of the tax bill. But that meeting never took place.
House Speaker Thomas O'Neill (D-Mass.) said yesterday that the administration had made some offers toward a compromise.By mid-day, however, White House Press Secretary Jody Powell issued a statement declaring "the president has authorized no one to commit him to any compromise in this (tax) area."
Powell did say the president had authorized Blumenthal to engage in discussions with members of Congress.
Committee sources yesterday described the administration compromise efforts as "just slipping and sliding." One source said the compromise being offered by the White House is one Ullman had proposed several weeks ago. "But now it's too late," he said.
A source close to the administration said the negotiations with Congress broke down yesterday when it became clear there simply weren't enough votes on the Ways and Means Committee to beat the Jones-Ullman proposal.