The Reagan administration is considering additional tax breaks to help the financially crippled auto industry as alternatives to restricting sales of Japanese auto imports, said David A. Stockman, director of the Office of Management and Budget.
Stockman wouldn't specify what breaks are being considered or whether they would only affect the auto industry. But administration sources said some members of the Cabinet-level auto task force are pushing for large tax breaks instead of import limits and that the task force hasn't ruled out refundable tax credits, which make it possible for firms not making a profit to receive money from the Treasury for making certain investments.
But such tax credits are revenue losers, and the administration is trying to balance the budget. In its budget revisions released Tuesday, the administration said it "does not support the previous administration's proposal to make 30 percent of the investment tax credit refundable. Withdrawal of this proposal reduces estimated outlays by $0.1 billion in 1981 and $3.5 billion in 1982."
Stockman, who with four other Cabinet officials opposes limits on auto imports, said outside of a committee hearing yesterday that "a lot more needs to be hammered out" before the president's auto task force can decide on the divisive import issue.
The task force report will be issued late next week or early the following week, an administration source said.
Meanwhile, two factions of congressmen are pressuring the president on the import question. A group of 18 House members, primarily from agricultural states, sent a letter to Reagan yesterday urging him "not to move precipitously to act on the recommendations of some of your Cabinet members to impose mandatory import quotas." The congressmen are concerned that restrictions on auto imports could lead to restrictions by the Japanese against sales of U.S. agricultural products there.
However, 87 other House members, mostly representing Midwest industrial districts, released a report Thursday suggesting "in the absence of a negotiated agreement, the U.S. should impose limits" on Japanese car sales here.
Those congressmen, making up the congressional auto task force, recommended import limits; amendment of federal environmental safety and energy regulations; tax changes and amendment of federal antitrust laws "to allow U.S. automobile corporations to share newly developed emission control, safety and fuel-efficiency technology."
They also suggested a different kind of refundable tax credit to help the auto industry, this one going to car buyers. They proposed a $500 credit, retroactive to Jan. 1, for purchases of new cars. An automaker would be eligible to participate in the program if it increased its fleet fuel efficiency.