Treasury Secretary G. William Miller yesterday called on the federal government to be cautious about expenditures financed by tax credits, a method he said the Congress is using increasingly.
"The recent trend is for every new idea to go through Congress as a tax credit, because it doesn't have to go through the budget process," said Miller. "We have to get a handle on it."
Miller also told a conference on taxes sponsored by the National Journal that recent energy tax credit proposals "go far beyond what we can afford."
Miller's main message was a call for "fiscal discipline" and some cautionary notes about several proposals for tax reductions.
But he also noted that aiding programs or sectors of the economy by reducing tax liabilities will cost more than $150 billion in fiscal year 1980. A portion of the budget that large "must be subject to accountability," said Miller.
One type of "tax expenditure" not likely to be changed, however, he said, is a tax credit for interest paid on mortgages.
Miller called inflation "the major domestic problem" facing the nation and restated the administration's commitment to "waging a vigorous battle against inflation."
The fight against inflation calls for fiscal discipline and rules out "a general tax cut in the immediate future," he said.
Miller said that liberalized depreciation allowances should get priority consideration when tax reduction appear in order. However, he faulted a proposal for accelerated depreciation that would allow companies to depreciate building in 10 years, equipment in five years and trucks and autos in three years. The benefits of the proposal would vary widely for different sectors of the economy, and the proposal would encourage the formation of tax shelters, he said.
Miller also expressed concern about proposals to exempt a certain level of interest income from taxation. Such a tax reduction would go to "individuals who are already saving" and wouldn't necessarily prompt an increase in savings, he said. Removal of interest rate ceilings might do more on that score, he said.
Miller reflected the administration's inclination toward a possible rollback of social security tax increases. A payroll tax cut might ultimately reduce prices, and "would also be more progressive for individuals than almost any income tax reduction," he said.