The Reagan administration plans to change some provisions in its business-tax proposals, possibly giving faster write-offs for overseas investment, Norman Ture, Treasury undersecretary for taxes, said yesterday. He also said the administration would be "grossly disappointed" if Congress did not enact the president's personal tax-cut.
Some technical changes in the administration's plan for more generous depreciation allowances will be suggested in the next week or so, Ture told reporters. These may include changes to help companies with significant foreign earnings, he said. Many of these companies now stand to pay more taxes under Reagan's plan for simplified and accelerated investment tax write-offs than they do at present. Overseas assets will be written off more slowly than U.S. investments under the president's plan.
Critics of the administration's tax program also have said that the 10-5-3 accelerated depreciation allowances -- which allows most investments to be written off in 10, 5 or 3 years -- would distort investment decisions.
Some industries would benefit much more than others, critics say. Ture commented that one or two particular industries that were not helped much by the plan had pointed out details that the administration thought it should change. The president has suggested three different treatments for structures depending on whether they are owned or leased and residential or nonresidential. This has been opposed by some congressmen on the Ways and Means Committee, after representations from the real estate industry.
High-technology firms have complained that they are not particularly helped by the 10-5-3 plan. The administration proposed special tax treatment for investment in research and development equipment, but experts say it would be worse rather than better. The high-technology industries have been pushing for a special higher investment tax credit for R&D, and a bill to this effect is before Congress.
Ture repeated the administration's denials that it is willing to compromise on tax proposals, and Sen. Bob Dole (R-Kan.), chairman of the Senate Finance Committee, sent a letter to the president to "commend you for standing firm on your entire program for economic recovery."
Dole, in a veiled warning to House Democrats who want to change the president's tax plan, said "the House is not alone in shaping tax policy. The Senate and the Committee on Finance will play a major role in structuring the final package that should reach your desk before Aug. 1." He said he supports "multiyear" tax cuts.
Ture and Beryl Sprinkel, Treasury undersecretary for monetary policy, told reporters that a larger budget deficit caused by the tax cuts would not increase inflation nor lead to higher interest rates if the Federal Reserve does not increase the money supply.
Sprinkel asserted that inflation will begin to show big improvements in much less than 18 months.
Ture was asked about Treasury figures showing that even with Reagan's tax plan, marginal tax rates for an average family would be only 1 percentage point lower in 1984 than in 1980. The administration claims that enacting the proposed cuts in marginal tax rates will mean that people will work harder and save and invest much more. Ture suggested that the effect might come as people realize that they are better off than they would be if there were no tax cuts, or that the administration's own forecasts of inflation might turn outto be too pessimistic, and therfore the Treasury projections of marginal rates also would be too high.
The chairman of the tax-writing House Ways and Means Committee, Dan Rostenkowski, said last week that any depreciation proposal should stop short of subsidizing investment.