The Carter administration gave its blessing yesterday to congressional efforts to explore the possibility of adopting a value-added tax, the European-style national sales tax now being touted by the chairmen of the House and Senate tax-writing committees.
At a breakfast meeting with reporters, Treasury Secretary W. Michael Blumenthal said he thought the notion of a value-added tax deserved "a thorough investigation." "I'm not unsympathetic to it at all," he said. "Whenever Congress is ready to hold hearings on it, we're ready."
Blumenthal's comments marked a softening of the administration's previous position on the value-added tax. As late as last December, Charles L. Schultze, President Carter's chief economist, criticized the concept as inflationary and too hard on the poor.
Previous Democratic administrations have been adamantly opposed to the value-added tax, contending it would be "regressive." The Nixon administration toyed with the idea in 1971, but later backed away in the face of congressional opposition.
However, Blumenthal made clear that he, like the two congressional tax-writing chairmen, was eyeing the plan as a possibility for future years, not this year or next. "Maybe 1981 would be a good year to be serious about it," he told reporters.
Blumenthal's remarks came during an hour-long session in which he also rejected as "not a good idea" and "inflationary" a suggestion by Federal Reserve Board Chairman G. William Miller that the U.S. impose an import surcharge if the wage-price spiral here worsens.
The Treasury secretary also expressed doubts that the recent reduction in the prime rate by some larger banks "represents any kind of trend." He also defended the Fed's recent money and credit policies as "suitable and quite proper."
Blumenthal's comments came as the House Ways and Means Committee completed hearings on Carter's proposed "real wage insurance" tax credit plan, with still no firm indication whether panel members ultimately will approve the measure and send it to the floor.
At the end of a week of hearings, Rep. Al Ullman (D-Ore.), the panel's chairman, seemed ambivalent about the measure. Ullman first said there was "still some possibility" the committee might approve the legislation, but later agreed there was "some skepticism" about the plan.
The committee heard yesterday from four economists and tax specialists, three of whom favored the real wage insurance proposal and one of whom opposed it. The panel is expected to consider other issues for the next week or so and then make a decision on the tax-credit plan.
Most observers believe the turning point may come sometime the week after next, when the committee's 24 Democrats are expected to caucus and try to agree on a common position. Insiders say there probably are enough votes to pass the plan if Ullman and other leaders push.
Blumenthal said yesterday he thought "chances of winning approval have improved" over the past few days.
In his remarks on the value-added tax yesterday, Blumenthal cited the plan as a possible spur to exports. Under international trade rules, value-added taxes may be rebated to exporters, while income taxes may not be given back.
Blumenthal also said the administration had not yet decided whether to propose granting "most-favored-nation" trade concessions to the People's Republic of China, but conceded that would have to be part of any new trade pact or the agreement would "not be very significant."
The possibility of an import surcharge was suggested by Miller as a way to bolster the dollar if inflation does not abate soon.