Due to a production error, an article on tax reform in Sunday's Outlook contained some incorrect numbers. There was an estimated $35 billion difference between original House and Senate versions of the revision of depreciation deductions and extension of the R&D tax credit. Also, the Office of Management and Budget estimated that increased depreciation deductions cost the Treasury $27 billion per year by fiscal 1986.

Due to a production error, an article on tax reform in Sunday's Outlook contained some incorrect numbers. There was an estimated $35 billion difference between original House and Senate versions of the revision of depreciation deductions and extension of the R&D tax credit. Also, the Office of Management and Budget estimated that increased depreciation deductions cost the Treasury $27 billion per year by fiscal 1986.

THE DANGER has always been that the president and Congress would turn out to like cutting the rates of taxation more than broadening the base, so that tax reform would become a tax cut. Now it appears that this is exactly what the Senate did in the bill it so happily passed last month, 97 to 3. New estimates show that instead of breaking even through 1991, the Senate bill would lose $21 billion. The loss would be even greater if the estimates did not assume, almost blithely, that the Treasury will pick up $29 billion over those years through tighter administration of the code. This already unbalanced Senate bill, moreover, is the base from which the conferees now propose to give up even greater sums by advancing the effective date of the first-year rate cuts and enlarging the cut for the middle class.

To finance their added generosity, the conferees will turn to the House bill, particularly its business provisions. The House legislation would raise $38 billion over the years through 1991, mostly by imposing a larger tax increase on corporations than contemplated by the Senate. The Senate bill would partially pay for a $113 billion tax cut for individuals through a $93 billion corporate tax increase. The House bill, while reducing the individual burden more, would raise business taxes $178 billion. The main differences are that the House would give business less generous depreciation allowances and would wipe out longstanding preferences for defense contractors and such industries as oil, gas and timber.

But there will be pressure from both the administration and the Senate, to say nothing of pressure from the industries involved, not to increase business taxes too much for fear of decimating investment incentives. It is not clear that, as a political proposition, the conferees will be able to raise on the business side of the ledger enough money to pay for all the gifts they want the bill to contain. At some point they will be greatly tempted to say, as in effect the Senate already has, that a few billion dollars in estimated revenues (everyone knows how unreliable such estimates are) stretching all the way to 1991 can't make that much difference. Forget the revenue estimates, the happy talk will go; let's have reform.

But it would be wrong, and the conferees ought not to succumb. The deficit this year will again be over $200 billion -- the entire federal budget just 15 years ago. To force it below $200 billion next year the two houses have had to throw both defense and domestic spending into standstills, and they are not sure, given the weakness of the economy, that even this will work. A fifth of the budget now has to be borrowed each year. Taxes need to be increased as well as reformed. The conferees will further mortgage an already dismal fiscal future if they forget this point.