House Ways and Means Committee members indicated yesterday they intend to provide a much larger tax cut for middle-income families than President Carter has proposed, and most likely will scrap a good deal of his $9 billion in recommended tax "reforms."
The committee held its first day of hearings on the tax bill as the President warned at a news conference that his proposed cuts and revisions are parts of a "balanced" economic program. He said that "without these needed reforms we would not be able to afford so large a tax reduction."
But that did not faze Rep. Al Ullman (D-Ore.), the Ways and Means chairman, who said he was sure "we're going to have a different mix" of tax cuts than Carter is proposing, and possibly with a net tax cut of only $15 billion to $20 billion rather than the $24.5 billion Carter is seeking.
Ullman also served notice that he plans to tack on amendments to reduce the "double taxation" of corporate profits and stockholder dividends and to extend a special jobs tax credit enacted last year as an inducement to businesses to hire more workers. And several other members suggested a tax credit to cover college tuition expenses.
The criticisms of the Carter plan came from virtually every corner of the committee. The only members to speak a kind word for the Carter proposals were Rep. Barber B. Conable (R-N.Y.), the ranking minority member, and Rep. Abner J. Mikva (D-Ill.), leading liberal.
On the other hand, both Reps. Joe D. Waggoner (D-La.) and Bill Frenzel (R-Minn.) complained that Carter's proposal would not provide enough tax relief to middle-income persons. Frenzel grumbled that, as he figured it, "they probably are going to be worse off."
Rep. Dan Rostenkowski (D-Ill.) lambasted Carter's proposal to limit deductions for medical expenses to costs of treating "catastrophic" illnesses. "The need for this provision has increased - not decreased - over the years," he said.
Frenzel and other Republicans criticized Carter's entire "tax reform" package. The proposal is such a hodge-podge, Frenzel said, it looks like tax planners went "out into the barnyard" and brought back "whatever stuck to their shoes."
Rep. Charles A. Vanik (D-Ohio), who often votes as a liberal, decried Carter's proposal to speed repeal of the 4 per cent telephone excise tax as "a bonanza" for the telephone company. The administration has touted it as an anti-inflation measure.
Finally, Rep. Jake Pickle (D-Tex.), who used to be President Johnson's congressman, asked the ultimate question: Why does the country need a tax cut at all? "Why can't we just leave it alone?" he demanded. After all, he recalled, Congress cut taxes just recently.
For families with incomes of $20,000 a year and up, the individual income tax cuts Carter has proposed will not be enough to offset pending Social Security tax increases; these families will see their total taxes rise if Congress accepts the President's plan.
By far the unkindest remarks were reserved for Carter's three biggest "reform" proposals - measures to limit deductions for "three-martini" business lunches and to phase out two big foreign tax breaks that allow multinational firms to void payment of taxes.
More than half the members present at the session raised some sort of objections to the proposal to restrict business lunch deductions. These critics ranked from liberals like Mikva to conservatives like Rep. James R. Jones (D-Okla.). Several expressed fears it would spur joblessness in the hotel industry.
The questioning also confirmed that Carter will have trouble pushing through the "reforms" involving foreign tax breaks - a phaseout of the present tax subsidy for exporter corporations and a provision ending the ability of big firms to defer taxes indefinitely on foreign-source income.
W. Michael Blumenthal, the secretary of the treasury, attempted to defend the package, reiterating the President's warning that the $24.5 billion price-tag must be kept intact - and that if the lawmakers chose to reject some of the $9 billion in "reforms" they will have to trim the cuts.
Blumenthal was aided, at least in theory, by Rep. James C. Corman (D-Calif.), a liberal, who suggested that the limit might be upheld more firmly if conservatives agreed to trim the business tax cuts that Carter has proposed if they turn down his business "reforms".
However, it didn't appear likely the rest of the committee would be taking that suggestion seriously. Ullman told reporters later that "we have to keep some reasonable relationship" between the business tax cuts and those earmarked for individuals.