The House yesterday ordered the Carter administration to stop trying to tax workers' fringe benefits, a potentially explosive issue that could affect millions of taxpayers, rich and poor.
By an overwhelming 386-to-12 vote, the chamber approved legislation that would bar the Treasury from issuing final regulations on taxation of fringe benefits at least until 1980, by which time the House hopes to tackle the issue on its own.
The size of the vote was a clear signal to the administration that Congress will not stand for any broader taxation of fringe benefits, which have mushroomed in recent years to become a major part of workers' contracts.
Commerce Department figures show that in 1977, fringe benefits accounted for $166.3 billion, or 14.4 percent of the $1.15 trillion in wages and other compensation paid American workers. In 1967, fringes accounted for 9.4 percent.
Technically, the tax code requires that all income - whatever its form - be taxed. In practice, however, the rules vary widely. Some fringe benefits, such as company-paid health-insurance premiums, are specifically exempted by law.
Jerome Kurtz, Carter's appointee as commissioner of the Internal Revenue Service, has argued that most fringe benefits should be taxed as wage or salary income. His efforts have drawn a vehement backlash in Congress.
Yesterday's vote marked the second such formal prohibition in a year. Last month Congress passed legislation barring IRS from issuing new regulations before July. The House also has passed several riders affirming that stand.
Both the Treasury and the House Ways and Means Committee have begun rival studies on the fringe-benefits question, setting the stage for a major battle over the issue late next year or in 1980.
Yesterday's measure, which now goes to the Senate, also would bar the administration from denying tax deductions for commuting expenses to construction workers assigned to temporary, out-to-town worksites - a move IRS tried, but was rebuffed on.
It also would relieve New Jersey state troopers of having to pay back taxes on cash need allowances. Last November the Supreme Court ruled that such allowances were taxable, but the troopers complained they were unable to pay.
The measures would let stand, however, the court's decision that subsistence allowances paid state troopers from now on should be taxed. The relief for the New Jersey troopers applies only to taxes owed for 1970 through 1977.
Fringe benefits once were regarded as mere "extras" for high-salaried workers, but recently have emerged as a major element in union bargaining. The big surge came in 1971-72, when the wage-price freeze limited pay increases.
Among the more generous fringe benefits frequently cited are free airplane tickets for airline workers and free tuition for children of college professors. Kurtz also has suggested taxing free parking that employes receive.