SEN. RUSSELL B. LONG seems to be emerging as the chief spokesman for an immediate tax cut. If anyone needs a new reason to be uneasy about the Whole idea, that should do. Sen. Long likes enacting tax legislation in great haste at the eleventh hour -- in the last days of the session or, as in the present case, just before an election.
"It's a tactical position that puts great influence into the hands of the chairman of the Senate Finance Committee -- that is, Sen. Long -- who, as the clock ticks, amiably offers the rest of Congress a choice between his bill or no bill at all. The senator's interests in tax benefits are deep and manifold. The rest of the Senate usually discovers only later the full implications of his bills. Sen. Long is running this operation with the practiced hand of a farmer herding a flock of sheep into the shearing pen. The sheep never seem to remember what happens next.
The enthusiasm for an immediate tax bill is essentially limited to the Senate Democrats. Because of continuing high inflation, the prospect of a big tax cut has proved to be markedly less popular than in the past. But some of the Democrats have made large promises and are desperately anxious for a chance to vote for lower taxes.
The Finance Committee is now drafting a bill for a cut in the range of $25 billion to $30 billion. That's a bit too high. The argument here is over the authomatic tax increases that will take hold next January, and whether a cut offsetting them would be non-inflationary. Social Security payroll taxes will increase, the oil windfall revenues will increase and inflation will continue to push individual taxpayers into higher brackets. There's a reasonable case for offsetting the oil windfall increase and the bracket effect, but both of them together will amount to something less than $25 billion. Cutting income taxes to compensate for higher Social Security payments is a much more questionable proposition. Next year's higher rates were enacted, after all, to pay for next year's higher benefits.
The next tax cut needs to begin funneling more money into investment. Both parties acknowledge it, but neither dares, in the present atmosphere, to try to introduce new ideas to the voters -- although there's some evidence that the voters are well ahead of them this time. If Congress seriously begins to write a bill, it's likely to start with a variety of conventional benefits for business, which will be termed support for investment. Then, to protect itself from charges of favoritism toward business, it will add even larger benefits for individual taxpayers. Either the actual encouragement of investment will be too small to count, or the total size of the reduction will be too big for the budget to carry without accelerating inflation. That's why the next several months are a bad time to try to write a tax bill.
But on the other hand, if the Senate is determined to have a bill and has neither the time nor the inclination to examine it closely, Sen. Long and the Finance Committee will be happy to oblige it.