Republican presidential candidate Ronald Reagan, seeking to preempt the tax-cut issue in the current presidential campaign, is expected to propose today a $22 billion tax reduction effective Jan. 1.
Republican sources said the former California governor will hold a press conference this morning to call for a 10 percent across-the-board tax cut for individuals, combined with faster depreciation writeoffs for business.
Although Reagan campaign aides would not directly confirm the new move, sources close to the GOP front-runner said the shift is designed to regain the initiative from Carter, who reportedly is considering a $15 billion to $20 billion tax cut.
Reagan, had previously endorsed a plan that would cut taxes by 30 percent over three years, but the effective date was not specific and the multiyear tax reduction was criticized as potentially inflationary.
Today's move by the Californian is expected to intensify the battle about tax-cut plans between Reagan and Carter, both on the presidential campaign trail and in the Democratic-controlled Congress.
To help drive the issue home, several GOP senators and representatives are expected to announce today that they will attempt to tack the new Reagan proposal onto every major piece of legislation in Congress this year.
At the same time, however, House Ways and Means Committee Chairman Al Ulman (D-Ore.) said yesterday Congress "will" enact a major tax cut early next session, but warned he will oppose any tax-cut legislation for the rest of this year.
Reagan was expected to stress today that he is not formally abandoning his previous tax-cut plan, which is based on a proposal by Rep. Jack Kemp (R-N.Y.) and Sen. William V. Roth (R-Del.).
The 10 percent cut for 1981 marks the first phase of the three-year Kemp-Roth proposal.
However, the shift is expected to be interpreted by some as a retreat from the Kemp-Roth plan, which has been criticized by Carter and other Democrats as "irresponsible."
A group of traditional GOP economists and former officials, including onetime Treasury secretary George P. Shultz, has been trying to persuade Reagan to soften his stance on Kemp-Roth, which many mainstream Republicans still oppose.
Ullman said in an interview that a sizable tax-cut package would be his panel's "first-order of business" when Congress reconvenes in January, and he urged President Carter to promise voters a 1981 tax cut in his scheduled update of the budget in July.
However, the Oregon Democrat warned that, for anti-inflation reasons, it would be "a grave error of judgement" for the president to ask Congress to make room for a tax cut in the 1981 budget resolution it will take up this fall, as some officials are considering.
And Ullman said he personally is so concerned about maintaining a balanced budget that he will explore alternatives for raising some taxes elsewhere to offset the cost of a general tax reduction package.
Along with the 10 percent tax cut, Reagan's new plan is expected to call for about $120 billion in additional spending cuts between now and fiscal 1984, enough to trim outlays to 19.5 percent of the gross national product, from 22.5 percent now.
However, Reagan is not expected to spell out now precisely where in the federal budget he would make the cuts. Carter's budget policy also is designed to hold spending down gradually.
The 1981 tax cut is expected to be portrayed as "the first installment" of a series of Reagan tax reductions to be followed by permanent "indexing" of the tax system to provide automatic adjustments to offset the impact of inflation.
The size of the tax cuts beyond 1981 will remain undecided until sometime next year, sources said.
The new Reagan task force on tax policy, headed by former treasury undersecretary Charls E. Walker, urged the candidate to soften his stand by leaving his post-1981 tax-cut plans indefinite.
The developments came as, separately, Alfred E. Kahn, Carter's chief inflation adviser, confirmed publicly yesterday that the administration is considering a $20 billion tax cut for 1981, also containing a speedup of depreciation.
Reagan's 10 percent cut would amount roughly to $22 billion, plus another $5 billion to $10 billion the first year for the faster depreciation writeoffs. His depreciation plan is somewhat more generous than Carter's.
Kahn also raised the possibility that the White House may "reexamine" its tight-budget policy if the recession grows much deeper over the next few months. However, he denied that the White House was "zigzagging" by proposing a tax cut.
Ullman's own tax cut plans include:
A "major tax reduction" to be enacted early next session, including faster depreciation writeoffs for business investment and standard rate cuts for individuals.
Consideration of some tax-increase proposals as well to provide "replacement" revenues for these cuts, to help offset the cost and maintain a balanced budget.
Some long-term changes in financing of the Social Security system. But Ullman said he saw "no way" to head off the big increase in Social Security taxes now scheduled for Jan. 1.
The Ways and Means chairman also declared that Congress would reject a new 10-cent-a-gallon gasoline tax if Carter requests one to replace his already-rejected oil import fee, as his chief domestic adviser on Sunday indicated he would.
Ullman was particularly strong in urging Carter merely to promise a 1981 tax cut when he unveils his revised budget estimates next month, and not to propose one formally as an amendment to the fiscal 1981 budget.
The Oregon Democrat said the recession now is severe enough that Carter "should" announce next month there'll be a tax cut in 1981, both as a political gesture and for economic reasons.
However, the chairman warned, if the president goes further and asks the lawmakers to make room for a tax cut in their budget resolution, it could "destroy the framework of fiscal integrity" now in Congress.
Ullman said that, with inflation still a serious threat, Congress must continue to try to balance the budget even in the face of the current recession -- the reason he is considering some offsetting tax increases as well.
He declined to spell out what tax increases he was exploring, but sources suggested these might involve a boost in some excise taxes or, possibly, a new levy on business.
Ullman conceded that his proposal for a value-added tax, a form of national sales tax levied at each stage of the manufacturing and distribution process, is dead. "It isn't in the picture now," he said.