Top Treasury Department officials yesterday made final decisions on the tax reform proposal they will present next week to Treasury Secretary Donald T. Regan for submission to President Reagan department officials said.
The officials met with Regan yesterday morning to make their last decisions on the plan, which Regan will present to the president about Dec. 3 or Dec. 4, officials said. Until yesterday no hard decisions on the package had been made, except that it would be a modified flat tax plan. Officials said they had studied all aspects of the 71-year-old tax code over the past 10 months and until this week most of those options were subject to revision. Regan can still change decisions reached yesterday, officials said.
Regan, in public statements on several occasions, has said he will recommend to the president a modified flat tax that would make the tax structure less progressive and eliminate many deductions and exemptions except the mortgage interest deduction. Such a tax would narrow the distance between the highest and lowest tax rates, taxing everyone at more nearly the same rate.
Officials at yesterday's meeting also decided at what marginal rates taxpayers would be taxed. The modified flat tax plan would lower marginal tax rates and offset that revenue loss by eliminating tax breaks so that the final product would raise no more and no less taxes than the current system.
Regan has said he is leaning toward modified tax plans similar to those proposed by Sen. Bill Bradley (D-N.J.) and Richard Gephardt (D-Mo.) and another by Rep. Jack Kemp (R-N.Y.) and Sen. Robert W. Kasten (R-Wis.). The range of marginal tax rates would be from 14 percent to 30 percent for the Bradley-Gephardt proposal and from 20 percent to 28 percent for the Kemp-Kasten version. Under current law, marginal rates range from 11 to 50 percent.