The chances of a tax cut beng enacted before the election seemed to lessen yesterday, but the possibility of passage before the end of the year was given a boost.
Senate Finance Committee Chairman Russell Long (D-La.), a key figure in the move by Democratic senators for a pre-election tax cut, conceded yesterday "it may very well be that we can't meet the time schedule."
But the senator went on to suggest that Congress could pass a bill between the election and the end of the year. In a speech to journalists at the National Press Club yesterday, Long noted "when Secretary Miller was testifying . . . he kept saying he was opposed to passing this bill between now and the election. I can't find anywhere in his testimony that he was against passing it before Jan. 1.
"So I take it that there is good possibility that we might pass it after the election rather than before," Long added. He reaffirmed his support for a bill and indicated that if there were a delay in getting one out of his committee, it would be of only a week or 10 days. The Senate Democratic Caucus has requested a bill from the Finance Committee by Sept. 3.
A Treasury spokesman yesterday refused comment on Long's interpretation of Miller's testimony on the timing of any tax cut. "Secretary Miller testified for three days running," he pointed out. Several senators, including Long, had tried to get Miller to comment on the possibility of enacting a tax cut immediately after the election, the spokesman added, but Miller just repeated his view that definitely there should be no cut before the election.
Businessmen testifying yesterday at the House Ways and Means Committee stressed the need for tax legislations aimed at helping business investment and productivity, rather than at boosting personal consumption. They differed, however, about the best timing for such legislation.
The same message was delivered yesterday by prominent economists at the Senate Finance Committee's continuing tax cut hearings.
Du Pont Co. Chairman Irving Shapiro told the House panel, "common sense dictates that the tax change should be dealt with in a definitive sense after the election." But both J.C. Penney Chairman Donald V. Seibert and Merrill Lynch Chairman Donald T. Regan argued for a tax cut before the election.
Seibert and Regan based their argument on the poor state of the economy and on the need for long-term action to improve business conditions and encourage savings. Seibert was speaking on behalf of the American Retail Federation, the National Retail Merchants Association and 12 large retail companies.
"The compelling reasons for a major tax reduction for 1981 are not short-term, nor do they suggest a countercyclical tax reduction to stimulate demand," he said.
Regan said a tax cut should be announced as soon as possible, because the economy is still very depressed. He said it would not be so much a tax cut as a "tax neutralization." Without a tax cut, federal tax revenues will be pushed up sharply by inflation.
Regan estimated that this would add $55 billion to taxes next year, while Shapiro put the figure at $40 billion or more.
All three expressed support for the proposed "10-5-3" depreciation plan, which would simplify and greatly increase tax deductions for businesses' depreciable assets. But Shapiro said that business would not care much what kind of improved depreciation proposals were enacted, provided that some kind were.
He also suggested the tax cut could be made after the election but before the end of the year.
The businessmen also supported a further cut in capital gains taxes and a reduction in corporate income tax rates.
At the Senate hearings, former Nixon administration Council of Economic Advisers chairman Herbert Stein rejected the calls for tax cuts, saying the revenues are needed for extra defense spending.
Martin Feldstein of Harvard argued in favor of a tax cut structured to help business. He said there is now a unique chance to reshape the tax system without swelling the federal budget deficit. He opposed tax cuts which would boost consumption and recommended that Congress lay out a program of tax cuts for future years.
The congressional hearings will continue next week with representatives from organized labor giving testimony to the House Ways and Means Committee. Labor so far has opposed an early tax cut.