Treasury Department officials yesterday denied published reports suggesting that decisions have already been made regarding the long-awaited tax reform proposals to be submitted to President Reagan next month.
The officials also said that the tax reform recommendations, requested by the president in his State of the Union address, probably will be submitted to the White House after the first week in December, not on Dec. 1 as Treasury Secretary Donald T. Regan has said.
Alfred H. Kingon, assistant secretary for policy and public affairs, told reporters that Treasury officials were to meet yesterday after receiving computer-compiled data on what the impact of various proposed changes in the tax code would be.
Kingon reiterated that the Treasury has ruled out a "pure" flat tax imposing a single tax rate on all taxpayers. He also repeated that the Treasury has rejected the notion of replacing the individual income tax with a value-added tax or national sales tax. Treasury has also tentatively rejected a "consumed income" tax, which would tax expenditures and exempt savings.
Beyond those decisions, all previously reported, "all the blocks will fall into place in the next month," Kingon said. Treasury officials have been particularly sensitive to reports about the study because of Democratic presidental candidate Walter F. Mondale's charges that President Reagan has a secret plan to increase taxes.
Regan is still "leaning toward" a modified flat tax proposal, Kingon said. But he added that Regan would drop that proposal if the data suggested that it would not work or another approach would be preferable. In fact, any early decision favoring one approach or another may have to be reversed if it does not work as part of the large mix of issues that Treasury must address, he said.
"Anything you can think of has been on the table," he said, but reports suggesting that certain tax changes are the leading contenders are wrong, he said. Some reports in the press and questions asked have been "just off the wall," he said.
Regan and other Treasury officials have talked often about specific changes in the tax code that should be reviewed in any attempt to simplify and reform the system, including such changes as putting a ceiling on the amount of fringe benefits that can be received tax free and eliminating "double" taxation of corporate earnings -- the combination of corporate income tax and taxes on dividends paid to shareholders out of the same earnings.
Treasury employes have been running those and other options through computer models to assess their impact in terms of revenue, fairness and simplicity, Kingon said. The Treasury proposal will be designed to be revenue neutral. "This study is not a revenue raiser," he said.
Kingon said that Treasury was only evaluating whether the proposal would be revenue neutral for the first year. The Joint Committee on Taxation has assessed other tax reform proposals, which appear to be revenue neutral in the first year but not over time.