A proposal to let single taxpayers escape taxes on up to $1,000 in interest income and married couples on up to $2,000 is rapidly gaining momentum on Capitol Hill and seems likely to be added to both the House and Senate tax bills.
The exemption would apply only to interest from special new one- or two-year savings certificates that could be issued by savings and loan associations and other thrift institutions.
Several Democrats on the House Ways and Means Committee are pushing the plan to sweeten their alternative to the president's tax bill.
At the same time, a bipartisan group in the Senate has urged the administration to add the proposal to the Reagan bill there.
The Reagan administration previously had opposed the added tax break for savers as too expensive, but is reported to be reconsidering.
Although neither house has decided on specifics, most of the drafts so far have been modeled after a plan by the savings and loan industry, which has been losing deposits as savers shift to money-market funds and other higher interest forms of investments.
Under the industry's proposal, interest on the new certificates would be 70 percent of that on treasury notes, now about 14.5 percent.
Meanwhile, the AFL-CIO yesterday issued a strong denunciation of the House Ways and Means Committee's new Democratic-drafted business tax-cut plan, branding it a "major disaster" that would virtually repeal corporate income taxes.
The labor federation in the past has generally been allied with the Democrats on tax issues, but this year the Democrats have shifted their ground.
In a letter to members of the panel, AFL-CIO President Lane Kirkland also complained about a spate of other tax reductions the panel has approved, from reduction of estate and gift taxes to special-rate cuts for investment income.
He warned that if the tax-cuts were enacted, "huge amounts of foregone revenue would be wasted in subsidizing investments that would take place anyway," leaving significantly less money available for the social programs the Reagan administration wants to cut and labor does not.
The business tax cut the panel has approved would replace President Reagan's proposed speedup in depreciation write-offs and instead allow firms to deduct the entire cost of a piece of equipment the year it is bought.
It also would cut the current 46 percent rate for corporate income taxes, and provide special tax relief for six "specially distressed" industries: airlines, autos, mining, paper, railroads and steel.
However, it also would bloat the cost of the tax bill by $3 billion to $4 billion, even if the provision lasts only for a year, as proponents are seeking.
Under current law, taxpayers may exclude the first $200 in interest and dividend income, or $400 for couples, but this provision expires and will have to be renewed this year or the exemptions will shrink to half those amounts.
The administration has proposed such a renewal, and also allowing more money to be set aside in Individual Retirement Accounts each year. The new savings provision has been offered separately.
In his statement on the business tax cuts, Kirkland charged yesterday that the proposals approved by the Ways and Means Committee would slash business' share of federal taxes from 23 percent in 1960 to 7 percent by 1986.
He said the panel's bill "combines the most regressive proposals of Republicans and Democrats and would saddle middle-income Americans with the share of taxes now borne by corporations and wealthy Americans."