General Electric Co. Chairman Reginald Jones yesterday called for tax cuts of up to $35 billion for business and individuals as a partial offset to the $90 billion in tax increases scheduled to go into effect next year.
Jones, speaking to the annual convention of the National Coal Association, said "the need right now is for a $25 billion to $35 billion tax cut, effective Jan. 1, 1981.
"Understand, this is not really a tax cut, since the 1981 federal budget already contemplates $90 billion of tax increases -- by way of such things as Social Security taxes, windfall profits taxes and the bracket effect by which inflation pushes individuals into higher tax brackets," he said. "Thus a $25 to $35 billion tax cut would merely cut back our scheduled tax increases by about a third."
Jones' call for a tax cut comes in the midst of a bitter partisan political debate over the issue. Last week, Republican presidential nominee Ronald Reagan triggered the latest round in the debate with a call for a $36 billion tax cut next year.
Congressional Democrats immediately responded by promising to come up with a tax-cut proposal of their own by early September. The Carter administration is working on a tax-cut plan for 1981, but the president's economic advisers are trying to stall the tax-cut debate until after the November elections.
In urging a tax cut next year, Jones warned that "the U.S. business community is going to have to invest about $5.5 trillion in the 1980s to bring our economy back to health."
To help spur that investment, Jones repeated the business community's call for a liberalized depreciation allowance for plant and equipment along the lines of the "10-5-3" formula being proposed by congressional Republicans. Jones also called for "a one- or two-point reduction in the corporate tax rate."
Jones, who has served as a chief business community spokesman on tax matters in recent years, said it would be almost impossible to raise the amount of private capital needed by busiiness under the current tax laws.
"We have a tax system that is tilted in favor of consumption and against savings and investment," Jones said. "And there is a growing realization in Washington that this tax system must be changed."