President Carter's tax package continued to take a battering in the House Ways and Means Committee yesterday as the panel rejected another of his reconstituted "tax reforms" and approved a big new tax break for charities, adding $5 billion to the cost of the bill.
In a second day of balloting, the committee voted 17 to 10 to scrap Carter's proposal to narrow the present income tax deduction for medical and casualty expenses, and instead approved a mild substitute that basically would leave existing law intact.
Carter had hoped to raise $2.6 billion in new revenues by restricting the medical deduction, money which he planned to use to offset the cost of general income tax reductions. The measure approved by the committee, however, would raise only $40 million.
At the same time, the panel approved a $2 billion to $3 billion tax break for charities that would allow taxpayers to take a special itemized deduction for charitable contributions even if they claim the standard deduction and do not otherwise itemize on their tax returns. The vote was 20 to 17.
The tax break involving charities had not been expected to pass.
The administration won one partial victory as committee Republicans agreed to reopen a decision made on Monday to scrap two other Carter proposals - to repeal the present deductions for state and local sales taxes and personal property taxes.
However, administration lobbyists, and some members of the committee as well, expressed the fear that if the panel's present mood continues, a majority may eventually vote to scrap the entire Carter tax bill and simply extend 1976-77 tax cuts.
That course, which is being proposed by Reps. Charles A. Vanik (D-Ohio) and J. J. Pickle (D-Tex.), has been given only an outside chance of approval. However, it was reported yesterday that there now were 16 votes in favor of that measure - just short of a majority.
Carter's proposal involving medical deductions would have combined the present writeoffs for medical expenses and casualty losses and allowed taxpayers to deduct only that portion exceeding 10 percent of their income. That way, the deduction would be limited to "catastrophic" expenses.
The committee voted instead rerely to tighten the present deduction by requiring taxpayers to include the cost of health insurance premiums as part of the overall medical deduction, instead of deducting it separately, as is now the case.
The panel also voted to make the cost of all prescription drugs and insulin deductible, eliminating the present "floor" that allows taxpayers to deduct only the amount that exceeds 1 percent of their income. However, the change also would deny deductions for non urescription drugs.
The provision involving Charitable deductions was passed after heavy lobbying by the nation's big charities. The administration had opposed the measure as too costly, but panel members, conscious of the November election, gave in.
There was some speculation by committee members that the charities proposal would be knocked out when the panel begins its second round of vote-taking on the tax bill. However, the strength of yesterday's vote appeared to indicate at least some of the tax break would remain.
Along with the other actions, the committee voted yesterday to approve a minor Carter proposal to repeal the present $25-a-person deduction for political contributions. But it postponed action indefinitely on two others involving taxes on unemployment disability benefits and capital assets.
The voting yesterday essentially completed the committee's work on the portion of Carter's tax package dealing with itemized deductions. Of the $8 billion Carter had hoped to raise from these provisions, the committee voted to bring in $1.2 billion and give away $2 billion to $3 billion more.
All votes are tentative, and may be reversed later when the committee reconsiders its initial decisions in a final round sometime in May. The panel also is scheduled to consider Carter's proposal for $33 billion in tax reductions.
The GOP willingness to reconsider the sales tax and personal property tax proposals came after staff members successfully completed plans that would "give back" any revenues these provisions might raise by reducing tax rates for taxpayers in the brackets affected.
One of these proposals would reduce tax rates for taxpayers in all brackets. The other would reduce by $200 the present $3,200 "zero bracket amount" that now applies to taxpayers who itemize - thus allowing them to claim more in itemized deductions than they may under present law.
Republicans had insisted on such a plan as a condition for supporting the sales tax and personal property tax proposals. Although the panel did not reach formal agreement on any such arrangement yesterday, Rep. Barber B. Conable (R-N.Y., ranking GOP member, indicated he would go along.
The proposal involving charities was cosponsored by Conable and Rep. Joseph L. Fisher (D-Va.).