The Carter administration, trying to rescue its proposal to repeal a controversial $1.1 billion tax subsidy for exporters, is exploring the possibility of merely revamping the law to shift more of the benefits to smaller corporations.
The strategy shift, proposed by a special task force under the cabinet-level Economic Policy Group, is slated to go to President Carter today for a decision. The recommendation has the backing of Treasury Secretary W. Michael Blumenthal and Commerce Secretary Juanita M. Kreps.
If approved, the move would mark an almost total reversal of Carter's proposal last January to phase out the subsidy, known as "DISC" - for Domestic International Sales Corporations. Carter promised to propose repeal of the subsidy during his 1976 campaign.
A recent administration survey shows that between 2 and 30 of the 37 members of the House Ways and Means Committee oppose even a modest cutback in the tax subsidy. Virtually all oppose repealing it.
The rationale behind the administration's shift ostensbly would be to help spur more exports in the face of the U.S. foreign trade deficit. However, previous studies by the administration have purported to show that the subsidy has little impact in bolstering exports.
The task-force proposal would limit the use of the subsidy to 4 percent of a company's exports and provide a bigger tax break for smaller companies just entering the export market.
The shift would sharply cut back the proportion of total benefits going to big multinational corporations. At the same time it would trim the amount of anticipated new revenues the Treasury from $1.1 billion to $200 million to $300 million.
While Blumenthal and Kreps favor the new strategy, other advisers, including Stuart E. Eizenstat, the president's chief domestic adviser, are said to have reservations.
The developments came as, separately, a Ways and Means subcommittee indicated yesterday it is about to undo 1976 legislation that tightened the tax treatment of Americans living overseas - and may end up recommending an enlargement of the pre-1976 tax break.
The panel, headed by Rep Joe D. Waggonner (D-La.), began a drafting session yesterday by deciding to consider several of the most generous alternatives that have been proposed and "then work down from there."
Most observers expect the panel to draft a bill that would provide large tax breaks to American working abroad. The Senate and the House and deadlocked over previous legislation.
Meanwhile, the Ways and Means Committee tomorrow may resume marking up a compromise version of Carter's tax-cut plan - including a controversial provision to cut taxes on capital gains - profits from the sale of stocks or other assets.
Chairman Al Ullman (D-Ore.) was expected to decide today whether to end the six-week-long recess on the tax bill deliverations, following an informal agreement by members that the compromise plan might work.
The compromise, worked out by Rep. James R. Jones (D-Okla.), would scrap Carter's big tax-cut and "reform" proposal and instead cut taxes for individuals by raising the personal exemption from $750 to $1,000 and reducing tax rates.
It also would slash the maximum tax rate on capital gains from 49 percent to 35 percent and cut business taxes by $5 billion. The only so-called "reforms" would be repeal of existing deductions for state and local gasoline, sales and personal property taxes.