IN A DISPLAY of great resolution, President Carter says he wants Congress to pass the tax-cut bill in its original form. There are to be no compromises. That's unfortunate, since the important thing now is the $25-billion reduction in income taxes to stimulate the economy. Mr. Carter is absolutely right about the necessity of getting it through Congress promptly, and he's right about the consequences - in terms of rising unemployment and welfare costs - of delay and dilution. But the bill also contains several hotly disputed attempts at tax reform, and they are slowing down its progress. Mr. Carter would be wiser to leave tax reform to another year.
The House Ways and Means Committee has already tentatively dropped some of the reform provisions from the bill. At the White House, people are talking bravely about persuading the Senate to put them back in. Those words, if seriously intended, suggest a profound misapprehension of the perilous path that tax legislation must follow. The Ways and Means Committee is a serious operation, genuinely devoted to a decent standard of fairness. The Senate Finance Committee, in contrast, is a kind of hospitality center for special interests, a safe haven for every kind of artfully drafted tax dodge, costly preference, protectionist ruse and fiscal outrage. The administration has not thought carefully enough about the hazards in dealing with the Finance Committee at the end of a session.
If the administration wastes more time in the House in a futile quarrel over tax reform, it is not hard to see what will happen next. By August, when the rest of Congress is panting to go home and campaign, the tax bill will be under leisurely consideration in the Finance Committee. The committee is always deeply sympathetic to tax reform - but the committee's idea of a reform is not the same as Mr. Carter's or, we might add, anyone else's. Do you suppose that the committee might choose, at the last minute, to entangle the tax cut with the tax credit for private school tuitions? Or to add a few lines imposing import quotas on foreign meat? The closer the tax bill gets to the final days of this Congress, the stronger the committee's bargaining position becomes.
The tax-reform proposals in the administration bill are all respectable. There is the tighter limit on business entertainment. There is the ending of deductions for state gasoline taxes. There are a couple of complicated changes in the taxation of corporations' foreign earnings.But all of them are secondary in significance. None of them is worth risking another end-of-session scramble in the Finance Committee.
Among economists, regardless of the political allegiances, there is very little disagreement over the necessity of cutting income taxes. Even a simple tax cut will not slide easily through Congress this year, because of the rising concern over inflation. A lot of congressmen are worried, quite properly, about the size of the continuing federal deficit. But at the present moment the deficit does not have much effect on the inflation rate. The proper course now is to rely on that $25-billion tax cut this fall to keep the economy growing at a moderate pace, and to attack inflation separately through the kind of direct attention to prices and wages that the president has already begun to organize. The attempts at tax reform in the president's bill are merely a distraction from that controlling purpose. Time is growing short in this congressional session, and it's the tax cut that counts.