The newly sweetened administration tax bill would cost $754.4 billion over six years, $20 billion more than the administration said it would and $48 billion more than the Democratic bill, according to the Congressional Joint Committee on Taxation.
As statistics became part of a very complex political fight, however, the joint committee also said that the Democratic bill would cost $4.5 billion more than the GOP alternative from 1981 through 1983. This is important because both sides say they want to balance the budget by 1984, and because the Democrats would requre that the deficit be down in 1983 before they cut taxes in that year. Their own large early tax cut might make that low deficit difficult to achieve, as the GOP has charged.
On other fronts in the sharp partisan skirmishing over the big tax cut bill, there were the following developments:
Over the strong objections of the leadership, House Democratic liberals are pressing for a separate floor vote to eliminate major tax breaks for the oil industry in the Democratic and Republican bills. The liberals plan to force a party decision on this procedural issue at a Democratic caucus today. The House leadership believes a separate oil vote could upset the fragile majority it claims to have lined up behind the Democratic Ways and Means Committee bill.
The Congressional Research Service, a unit of the Library of Congress, completed two studies which cast doubt on the claim of Ways and Means Democrats that their bill provides significantly more relief than the GOP bill does for persons making less than $50,000 a year. The second CRS study completed yesterday contended that the cutoff point would really be $35,000, if a third year of cuts went into effect. If it did not, the study contgended, "the Ways and Means Committee tax cut would result in higher tax payments than the (GOP Senate) Finance Committee bill for all households above the $10,000 income level," because the total Republican relief over three years would be greater than the Democratic relief over two.
In an effort to keep wavering Southern conservative Democrats in the fold, Rep. Don Rostenkowski (D-Ill.), chairman of the Ways and Means Committee, reportedly has warned members of that swing group that if they fail to keep comments to support the Democratic bill and it fails, he will move in conference to accept the Senate oil tax provisions. There are less generous than either House bill to the oil industry, which the Southern conservaties want to help.
In the Senate, a key test of the "trigger" idea for a third year of tax cuts, a proposal backed by House Democrats and adamantly opposed by the Reagan administration, was defeated by a vote of 58 to 37. Sponspored by Sen. J. James Exon (D-Neb.), the amendment would have required the average interest rate on 91-day Treasury bills to fall to 10.5 percent in 1982, in order for the third year of cut to go into effect. If the rate did not reach that level, the tax reduction would be reduced depending on the size of the deficit for that year.
The joint committee's estimate of the cost of the administration tax cut differed with the administration's for two major reasons: the Treasury had not yet had the opportunity to include the full cost of a charitable gifts deduction added at the last minute by Rep. Barber B. Conable Jr. (R-N.Y.), and the joint committee and Treasury have significant differences over the cost of indexing the tax system, or tying it to inflation, starting in 1985.
Because the administration believe inflation will drop to a far lower rate than most other estimators, its estimates of the cost of indexing individual brackets, the personal exemption and the zero bracket amount or tax threshhold are far lower than those made by the joint committee.