The chairman of the Senate Finance Committee has signaled some of the details of the revenue raisers and tax increases he will try to attach to the debt ceiling bill, including reporting requirements for capital gains, significantly broadened minimum taxes and perhaps tightening rules governing independent contractors.
At the same time, certain key House Democrats are in the preliminary stages of developing significant new sources of revenue and, in an effort to prevent the burden from falling entirely on individuals, they are looking at a number of benefits that now go to companies.
Dole, who is scheduled today to detail his plans to increase taxation of the "underground economy," warned a group of trade association executives at a Chamber of Commerce breakfast that there is considerable political pressure to pass legislation ensuring that the wealthy pay taxes:
"There is a perception out there rightly or wrongly that this administration lacks sensitivity, lacks compassion and spends most of its time dreaming up programs to help the quote rich. Now we can all argue that the perception is not accurate, but you see it on a daily basis, morning, noon and night," he said. Among the specific points he made to the group were:
In terms of the minimum tax, Dole indicated that his proposal will be significantly broader than the initiative announced by the president. Dole described his plan as an effort to set "a flat rate (probably 15 percent) on a comprehensive income base."
President Reagan has proposed a corporate minimum tax, but it would function to businesses that use 13 tax "preferences" or "loopholes" to reduce their liability to little or nothing. Dole is, among other things, considering adding to the list of preferences the benefits corporations received from the new depreciation schedule in the 1981 tax bill known as 10-5-3, according to aides.
In addition, Dole, unlike the president, is preparing to propose replacement of the existing haphazard minimum taxes on individuals with a broader alternative minimum tax. At the session, he cited possible "preferences" to be included under the tax as the tax benefits from Individual Retirement Accounts and Keough plans, stock option preferences and intangible drilling costs.
Dole contended that "just by better informational reporting," the government can pick up $3 billion to $4 billion from persons who do not report income from capital gains and interest and dividend income.
Dole ruled out a withholding requirement for these sources of income, and for independent contractors, but he appeared to be signalling support for tighter reporting requirements to the IRS when such transactions take place. He is expected to provide greater detail on the subject at a press conference today.
On the other side of the Capitol, House Democrats, operating without centralized direction, are preparing a number of options to raise revenues, most of which involve raising corporate taxes or closing loopholes beneficial to business.
Rep. James Shannon (D-Mass.), a member of the Ways and Means Committee, is floating among members a set of tax changes that would raise $11.1 billion in 1983, $37.2 billion in 1984 and $43.5 billion in 1985.
Among these would be repeal of the 10 percent individual cut scheduled for 1983 and speeding up indexation to January 1, 1984, a move similar to one proposed by Dole; repeal of the sales tax deduction; repeal of the controversial leasing provisions allowing corporations to buy and sell tax breaks; ending the speedup in business depreciation scheduled for 1985 and l986; elimination of some of the oil tax breaks passed last year and elimination of the investment tax credit from the base on which depreciation is calculated.
Shannon said, however, that some Democrats view the proposal as inadequate. Rep. Leon Panetta (D-Calif.), of the Budget Committee, Shannon said, is trying to come up with a method of reducing Reagan's deficit from $91.5 billion down to $75 billion.
To accomplish this, even with significant budget cuts, would require raising taxes by about $17 billion, Shannon said.