Sen. Russell B. Long (D-La.), chairman of the Senate Finance Committee, said yesterday that he plans to propose a sizable cut in capital gains taxes - rivaling the two leading measures now being considered in the House - when the tax bill gets to the Senate.
The proposal, which Long said was patterned after a 1963 recommendation by then-president John F. Kennedy, would reduce the portion of a capital gain subject to tax from the current 50 percent to 30 percent. Capital gains are profits from the sale of stocks or other property.
Although Long did not provide any estimates, congressional sources calculated that his plan would slash revenues by about $3 billion and trim the maximum tax rate on capital gains - now paid by only a handful of high-income taxpayers - to 28.5 percent, from 49.1 percent now.
By comparison, one of the House bills, proposed by Rep. William A. Steiger (R-Wis.), would pare the maximum capital gains tax to 25 per cent and cost the Treasury $2 billion. Another, by Rep. James R. Jones (D-Okla.), would yield a 35 percent maximum rate and cost $1.2 billion.
Long unveiled his proposal in a speech before the National Press Club, in part to prod the House Ways and Means Committee, which is preparing to vote on the Jones provision. The panel voted Tuesday to provide an inflation adjustment for capital gains taxes.
"I have never tried to tell the House what it should do," Long said. ". . . But the facts of life today will force the House to send us a large tax bill, and we will amend it." He said the Senate probably would enact an overall tax cut of $15 billion for individuals and business.
Long's comments yesterday were another setback for the administration. President Carter is vehemently opposed both to the Steiger and the Jones provisions, and at times has threatened to veto them. However, most observers believe the administration is waging a losing fight.
However, Long's proposal differs from the other two in one key respect some say Carter may find palatable: it would retain the "minimum tax" enacted in 1969 to prevent high-income persons with large amounts of capital gains from escaping payment of taxes.
Both the Steiger and the Jones proposals would exempt capital gains from the minimum tax - effectively repealing it, since capital gains provide 85 percent of the provision's present revenue. Long's plan would tax 30 percent of a capital gain at rates between 14 and 65 percent, and exempt the rest.
Long said yesterday he also plans to propose repealing a provision in present law that requires high-income taxpayers to offset the untaxed portion of their capital gains by reducing the amount of their salary income whose taxes are limited to the theoretical 50 percent "maximum" rate.
Repeal of the provision has long been sought by conservatives, who contend that if subjects salaries of some high-income taxpayers to confiscatory tax rates.
Long's proposal came as, separately, leaders of the House Ways and Means Committee succeeded in holding the line yesterday against a series of amendments to the tax bill. That paves the way for a round of key votes this morning which may lead to approval of a compromise bill.
The panel first turned down a proposal by Rep. Willis D. Gradison (R-Ohio) that would have provided the same inflation adjustment for regular income taxes that the committee approved Tuesday for capital gains taxes. The proposal lost by a vote of 23 to 13.
Then, by similar majorities, the committee defeated proposals ranging from repealing the present business deductions for lunches, yachts, clubs and hunting lodges to enacting new tax breaks for small businesses and timber interests.
The compromise the panel is expected to approve today or tomorrow includes the Jones proposal on capital gains and a straight $15 billion tax-reduction for individuals and business. However, it still is uncertain whether the proposal will go through intact.