The Senate Finance Committee agreed yesterday to have its tax cut bill ready "no later than noon Friday" and neared agreement on major proposals for a business tax cut.
The committee decided to vote today on proposed cuts in personal tax rates and on changes in depreciation rules for business investment.
There seems widespread agreement among members for cuts in personal tax rates at all levels, and accelerated write-offs for business investment along lines proposed by Sen. Lloyd Bentsen (D-Tex.) in a bill introduced Monday.
The Finance Committee's swift action comes as the administration is putting the finishing touches on its own tax and economic revitalization proposals. President Carter flew back to the White House from Camp David late yesterday afternoon to work on them, and plans for unveiling next week, press secretary Jody Powell said yesterday. The Senate committee thus seems likely to finish first.
Donald Lubick, assistant Treasury secretary, said yesterday that the administration will announce its own tax plans at the right time, which will not be before Friday.
Treasury Secretary G. William Miller said the president's economic advisers hope to send their policy proposals to the White House by this weekend, although a few issues may not be resolved by then.
Miller said in an interview that he doesn't yet know where the president will draw the line between individual and business tax cuts. "That's the question we have to decide."
The administration will ask Congress to make rules for depreciation simpler and more generous, with tax deductions corresponding more closely to actual useful life of plant and equipment, Miller said, but he wouldn't reveal the size of the proposal.
Miller met with a group of corporate executives yesterday, but didn't offer them details. Although the plans will soon be disclosed, the administration will not present legislative proposals to Congress until the new year, he said.
"The problems are too serious, too important, too long-range for us to rush out and try to initiate legislation in the few weeks left before the recess," he told the business leaders.
Finance Committee members agreed yesterday to produce a bill with an annual Treasury cost of no more than $70 billion by 1985. Yesterday morning they agreed that next year's personal tax changes should cost between $6.4 billion and $13.5 billion. On Monday they decided that the bill should cost between $25 billion and $30 billion in 1981.
Chairman Russell B. Long (D-La.) said he wanted the committee to vote first on "what the rank and file are going to get." He said the committee should decide the "big ticket items" and leave small, miscellaneous proposals until the bill is on the floor, where the committee can offer an amendment if necessary.
The cut in personal taxes will be aimed at offsetting the automatic income tax increases produced each year by inflation, and the Social Security tax increases scheduled Jan. 1. But the committee is not considering a specific tax credit to offset the Social Security rate rise.
Long suggested that the committee consider a combination of the following for the personal tax cuts:
Cuts in tax rates, details of which will be worked out by committee staff for today's vote;
An increase in the familiar personal tax exemption, now $1,000 for each individual covered by a return;
A rise in the so-called zero-bracket amount (successor to the standard deduction), which helps set the floor below which income is tax free;
A rise in the earned-income tax credit available to low-income working parents;
Increased deductions for donations to charity;
A cut in the so-called marriage penalty, whereby working couples who are married pay more tax between them than if they were single, and living together.
On the business side, Long said, he was "leaning towards" Bentson's proposals. These would cost an estimated $4.7 billion in fiscal 1981, building up to about $18 billion a year by 1985. Long suggested that the committee agree on that.He said it would always be possible to switch in three years time to the more generous depreciation plan backed by the Republicans.
Within the committee, agreement seems quite close. Ranking Republican Bob Dole of Kansas told reporters that while he supported cuts in personal tax rates, and accelerated depreciation along GOP lines. "there's enough of it in there [the committee's options] that we could vote for it." Sen. William V. Roth (R-Del.) decided not to put forward his proposals for across-the-board tax cuts and more generous depreciation yesterday but to work with the committee's options for the time being.
However, the Constitution says the House has to initiate tax legislation, and it is still far from doing so. Rep. Dan Rostenkowski of Illinois, No. 2 Democrat on the Ways and Means Committee, said yesterday, "I don't believe we're going to write a tax bill this year."