The House Ways and Means Committee yesterday tentatively approved President Carter's proposal to repeal to federal income tax deduction for state and local gasoline taxes, but rejected two other Carter "reforms" repealing the deductions for sales and personal property taxes.
In its first day of work on Carter's tax-reduction and "reform" recommendations, the panel voted 21 to 16 to take away the gasoline tax writeoff. It has supported such a step in one form or another three times in the past four years.
However, the committee then balked, 19 to 18, at Carter's proposal to eliminate the deduction for state and local sales taxes.
That was an important vote, because eliminating the sales tax deduction would bring in $3.1 billion of the $10 billion Carter hopes to raise to help offset the tax reductions he is recommending.
But the committee indicated it may reconsider the vote today if staff members can work out a plan that effectively would "return" any increase in taxes to those who previously claimed the deduction - by reducing income tax rates for middle-income taxpayers.
Rep. Al Ullman (D-Ore.), chairman of the committee, ordered the staff to try to do so after Republicans warned they would not support any of the proposals for "reform" until they saw who would benefit from any tax cuts the committee might pass.
Carter has proposed an estimated $33.9 billion in tax cuts for individuals and business, to be offset by $10 billion in revenue-raising "reforms." But conservatives have complained the cuts are skewed too much toward lower-income levels at the expense of the middle class.
The votes to scrap the sales and personal property tax measures came despite a last-minute appeal by Ullman, who warned committee members that "if we can't do these three items" in the Carter reform package, "we can't do anything at all."
The vote against eliminating the deduction for personal property taxes was 20 to 17.
The three provisions are among the least controversial that the president has recommended. Others, including his suggestion to limit business deductions for such things as the "three-martini" lunch, are deemed to have almost no chance of passage.
Carter took the occasion of yesterday's deadline for filing federal income tax returns to promote a new "Citizens Committee for Tax Reform in 1978."
Set up to lobby for enactment of his tax plan, the group, made up of some 65 businessmen, labor leaders and "average citizens," is headed by John G. McMillian, chairman of Northwest Energy Co. of Salt Lake City. Carter told reporters in the White House briefing room: "I can assure you there is lots of enthusiasm in the White House . . . and with the American people" for overhauling the tax system.
The Republican objections to taking up the "tax form" proposals before the tax reduction portion of the bill were brought up by the ranking minority member of Ways and Means, Rep. Barber B. Conable (N.Y.), just after the votes. Republicans had opposed all three "reforms."
In a blunt statement of position, Conable told the panel's Democrats that "there's a question of strategy that we need to discuss." He said GOP members would not support any "reforms" without assurances that the taxcuts would not "stick it in the ear of the middle class."
Ullman had laid out a schedule that called for considering the revenue-raising provisions first and then the tax-cut proposals - to prod panel members into supporting the "reforms." Yesterday, the first day, was spent on itemized deductions.
However, that schedule now may be in jeopardy. The committee appears badly splintered over the tax proposals. The Democrats caucused at lunch-time, but were unable to agree on any strategy.
Elimination of the gasoline tax deduction would result in tax increases of anywhere from $16 to $67 for taxpayers who itemize deductions, with most of it falling on those in the $10,000 to $50,000 brackets. Carter would offset this with tax cuts.
The provision to end the deduction for state and local sales taxes would increase taxes by between $14 and $302 for most itemizers, with the largest increases falling in the $15,000 to $20,000 brackets.