The House Ways and Means Committee is scheduled to take up the issue of Social Security taxes again tomorrow, with the possibility that members may vote to reverse their decision of last Thursday to roll back payroll tax increases slated for 1979 and 1980.
Although tomorrow's session ostensibly is only to send the bill to the floor formally, committmitee sources say enough members appear to be having second thoughts to make the outlook uncertain. The vote last Thursday to roll back taxes was 19 to 18.
Rep. Dan Rostenkowski (D-III.), chairman of the panel's health subcocmmittee, and other senior Democrats have been trying to persuade some junior member's to change their votes. While no one has formally announced a shift, committee sources say there's "a good chance" for reversal.
The commitee voted last Thursday to roll back payroll taxes to last year's levels for workers earning $16,500 or less and to trim in half the currently scheduled increases for persons earning above the amount. The changes would affect payroll taxes in 1979 and 1980.
However, Rostenkowski and several other senior Democrats oppose the panel's decision to finance the rollback by using general income tax revenues to bolster the Medicare hospital insurance fund. The committee had been divided over how to accomplish the rollback.
In another tax development, the Carter administration stepped up its campaign to ward off a Republican sponsored amendment that would repeal one of the major "tax reforms" enacted in 1969 - the decision to raise the effective tax rate for captial gains and make them subjects to the catchall minimum tax.
In an unusual move, Secretary of the Treasury W. Michael Blumenthal sent letters to Ways and Means members warning that enactment of the amendment, sponsored by Rep. William Steiger (R-Wis.), would "sharply erode the progressivity and . . . equity" of the income tax system and cost the Treasury $2.2 billion in taxes.
The provision has become a critical element in the committee's consideration of President Carter's income tax cut proposal. Liberals have warned that if the panel votes to reduce capital gains taxes, they will back a second proposal that would scuttle the entire tax bill.
The capital gains provision is being supported by conservatives, who contend that it actually would produce new revenues for the Treasury because it would spark a stock market boom.
However, Blumenthal charged yesterday that these assertions were "supported by neither evidence nor logic" and that the rationale behind that theory "does not match the facts." Capital gains are the profits from the sale of stocks or other assets. Half such gains now are subject to tax.
There was no indication yesterday how the panel would handles the Social Security issue - whether opponents merely would seek a different way to finance the payroll tax rollback, or would try to defeat the measure entirely. Nor was there any hint of how many members might change their votes.
Meanwhile, Jody Powell, President Carter's press secretary, said yesterday the administration still has not abandoned its goal of balancing the budget by the end of Carter's first term, but said the state of the economy will determine whether that is achieved.