HAVING LOST CONTROL of his energy program altogether in the Senate, President Carter is now struggling to recapture it in the conference. Congress is, naturally enough, giving primary attention to the plan's effects on energy consumption - but the energy plan is also a vast and complex tax bill. If you try to follow Mr. Carter's various tax policies, in energy and in his other legislation, you will see some of the reasons for his current troubles in Congress.
The Carter administration has talked a great deal about tax reform - understandably, when you recall how much candidate Carter talked about it last year - and a bill under that label is promised this fall before the end of the congressional season. But the reform bill will be, in fact, the fourth Carter bill with major importance for taxation. The first three - energy, Social Security financing, and welfare reform - were not very tightly fitted to each other when they left the White House. But the longer Congress works on them, the more anomalies and collisions of purpose they contain.
As new Presidents occasionally do. Mr. Carter tends to overestimate the power of the office. That leads him to spend too much time on the preparation of his programs and not enough on what happens to them after he has sent them to the Capitol. Having an orderly and precise mind, Mr. Carter also likes to think in terms of intricate, comprehensive solutions. The Carter White House has shown itself very good at launching enormous amounts of highly complex legislation. But it doesn't seem to have any very effective way to follow that legislation thereafter, to see that all the parts continue to fit together as they move through Congress.
The energy taxes are in doubt, the tax-reform bill has yet to appear and the administration is currently also considering a tax cut to stimulate the economy. But amidst all that uncertainty, there is one thing that you can say with absolute certainty about your taxes; they will rise automatically next January, as the new Social Security rates take effect. Present law requires an increase of $9 billion a year. To keep the fund solvent Mr. Carter proposes raising its revenue a further $7 billion a year, and Congress will probably insist on collecting all of it through the traditional method, the highly regressive payroll tax. The forthcoming tax-reform bill is reported to contain an income-tax cut of about $20 billion. It's important to keep in mind that the first $16 billion or so of that cut would only offset the rise in Social Security taxes.
When the Carter administration talks about tax reform, it means income taxes. For all its faults, the income tax tries to follow a rule of fair treatment through all of its credits and deductions. There are no credits or deductions to the Social Security payroll tax. Everybody pays the same rate, on every dollar from the first he earns up to (currently) $16,500 a year. The income tax's earned-income credit is supposed to be a kind of compensation for the burden of the payroll tax on the people employed at very low wages. The Carter welfare bill would expand the earned-income credit, but mainly for people in the low-middle range - not the people at the bottom of the income ladder.
Mr. Carter's tax on crude oil is in trouble partly because the administration has never come clean on its plans for all that money. Last spring officials said that it might be used for welfare reform. Later the administration said that the oil-tax money might be used to pay for the income-tax cut in the tax-reform bill. If the new tax is paid by everyone who uses oil and rebated through income-tax cuts, that is a fair and reasonable mechanism. It hurts people who insist on using a lot of oil, and it benefits people who use less - which includes most of the poor. But there is now a looming possibility that Congress will rebate a very large proportion of that oil-tax money to oil producers. That would shift the national tax burden more heavily onto all consumers, rich and poor, to the benefit of the oil industry. Mr. Carter doesn't like that idea. But there are indications that he may accept something like it to get his energy legislation through the conference.
The case grows steadily stronger for deferring the tax-reform bill, rather than scrambling to fulfill a campaign promise with ill-considered legislation that Congress isn't going to act on unitl next year in any case. The administation already has more tax legislation in motion than it can manage. The immediate need is closer attention by the White House to effects of the present bills on American economic growth and the distribution of their burdens among taxpayers.