Democrats and Republicans on the House Ways and Means Committee have agreed to begin work next week on a bill to reduce Social Security taxes, but they remain stalemated on President Carter's tax plan, panel sources said yesterday.
A meeting between key committee Republicans and Chairman Al Ullman (D-Ore.) produced general agreement to take up the Social Security issue, in a separate bill, before the panel tackles the Carter tax proposal.
The two sides continue to be split over how to work out a compromise on the president's tax proposal, and particularly over a controversial Republican amendment that would lower taxes on capital gains.
The provision, proposed by Rep. William A. Steiger (R-Wis.), is considered a key sticking-point in the committee's consideration of the Carter tax plan. Unless it is scrapped or diluted, liberals may reject the whole bill.
The failure of the two sides to work out a compromise marked a disappointment for Ullman. Because the panel's Democrats are divided, Ullman needs GOP support to push through the Carter tax plan.
But Demmocratic sources and Rep. Barber B. Conable (N.Y.), the panel's ranking Republican, said the two sides would continue their talks next week, possibly considering specific compromise plans worked out by staffers.
The agreement to begin work on a Social Security tax rollback does not mean that that issue is settled. Panel members also are sharply divided over how to reduce Social Security taxes, although many favor using income-tax revenues.
The failure of the two sides to reach agreement continued the uncertainty over the President's tax cut proposals. The committee suspended work on the plan two weeks ago in hopes of working out some sort of compromise.
Conable said yesterday GOP members were especially adamant in rejecting efforts by Ullman to dilute the Steiger amendment, which is being strongly opposed by the White House and the Treasury Department.
The Steiger provision effectively would undo one of the major 1969 "tax reforms" by rolling back the effective tax rate on capital gains. Capital gains are the profits from the sale of stocks or other assets.
Conable said while some liberals regard the measure as a "retrogression," the Republicans believe it actually would bring more revenue into the Treasury by stimulating investment. "We're not inclined to dilute it," he said.
Ullman had been trying to persuade the Republicans to go along with his plan for a compromise that includes a $15 billion tax cut for business and individuals, $6 billion in revenue-raising measures and a $5 billion payroll tax cut.
The Ways and Means chairman said most of the Democrats on the committee had recommended changes that generally followed that pattern. However, the Democrats have not formally voted on the issues.
The Social Security tax cut the panel will consider next week is expected to be in the neighborhood of $4 billion to $5 billion. The major snag is likely to be over how to replace the taxes that would be cut.