House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) predicted tonight that tax reform will be a central focus for his committee and called on the business community to "see beyond the battle flags of your own special interests."
"Tax reform ought to be done. Tax reform can be done. All it takes is a lot of education, a lot of pushing and a lot of negotiating -- all against the clock," he said in a speech to the New York Economic Club.
However, Senate Finance Committee Chairman Bob Packwood (R-Ore.) sounded several arguments for preserving some of the benefits now in the tax code when he spoke before the same group.
Listing such goals as health care and retirement pensions (which are generally exempt from taxation), Packwood said the tax code is a much better way than spending programs to achieve them.
"If we don't have employer-provided health insurance and use the tax code as an incentive, if we don't have a variety of other tax incentive programs, then be prepared for a host of government spending programs like Amtrak. There is an example of well-spent money," Packwood said.
Packwood also voiced doubts about doing away with or limiting accelerated depreciation write-offs for new investment, a change proposed in most of the principal simplification programs.
Rostenkowski's speech marked the congressman's warmest endorsement by far of the general idea of restructuring the tax code, although he avoided supporting a specific package or even using the word "simplification."
Several elements will be necessary to pass any tax package this year, the Chicago Democrat said. For one, President Reagan, who is "riding a new spirit of populism" with his Treasury Department's tax-simplification plan, must "bang the drum loudly," Rostenkowski said.
So far, the White House has delayed deciding what portions of the Treasury plan to retain or delete before Reagan endorses it. The current deadline calls for a plan, perhaps after negotiations with congresional leaders, in four to six weeks.
Treasury Secretary James A. Baker III is to testify before Rostenkowski's committee on Wednesday, but is expected to support little beyond the general notion of reducing rates and eliminating many deductions and credits.
Rostenkowski said that Baker's testimony will send the campaign for reform into "a new and more combative phase. From that moment on, tax reform moves from the cloisters into the coliseum."
Rostenkowski said another condition for reform is that "we can't make side deals that remove certain tax breaks from play . . . we've got to start negotiations with everything on the table."
Tax reform should not be a disguised tax increase, although revenue may have to be raised in the future to close the deficit, Rostenkowski said. If so, "that's the president's call, not ours," he asserted.
Business will play a crucial role in the debate, and corporate executives -- many of whom were in the audience -- should work with Congress rather than concentrating only on the particular loopholes that benefit them, Rostenkowski said.
"Too often I talk to heads of business who declare their support for reform -- only to be attacked by their Washington lobby pursuing the firm's special interest with a vengeance," the Ways and Means chairman said. "Too often, the falconer never talks to his falcon. The result? Confusion, ill will and delay."
Rostenkowski's objections to the current tax code -- that well-intentioned provisions have become unproductive and that tax policy is made in a crisis -- sounded like those of a born-again tax reformer. In the past, Rostenkowski has praised tax revision only in the most general terms.
But he gave little clue about exactly what kind of changes he would like to see emerge from his committee. He did emphasize the increasing political popularity of tax simplification. "To those who are preparing to stand against change, I have warning," he said. "Don't underestimate the public demand for reform. Not just in think tanks and among liberal tax lawyers, but in the great belt of middle-income earners whose taxes are automatically withheld and sent off to Washington."