The Democratic Party, breaking with traditional approaches, today endorsed in general terms both an overhaul of the federal personal income tax system and a pay-as-you-go approach to congressional budget-making.
The two proposals, both adopted as unanimous voice vote amendments to the party's draft statement on the economy, were among the first concrete signs on the economic front of a party moving beyond a posture of vague generalities peppered with broadsides against the Reagan administration.
"I think people are going to come away from this conference with a sense of the ferment and the rethink that is going on in the party," said Rep. Richard A. Gephardt (D-Mo.), coauthor with Sen. Billy Bradley (D-N.J.) of a tax-streamlining bill that, in the process of eliminating many tax loopholes used by the wealthy, would set a flat rate for most taxpayers and a modified graduated rate for those in higher brackets.
Specifically, the bill would drop the rate to a flat 14 percent for single taxpayers with incomes up to $25,000 and for couples with incomes up to $40,000. A graduated surtax ranging from 6 percent to 14 percent would be applied to incomes above those levels.
Those changes would have the effect of reducing the maximum rate from the 50 percent it is now to 28 percent. To alleviate the burden on taxpayers at the low end of the scale, the personal exemption would go up from the current $1,000 to $1,500 and the zero bracket amount for joint returns would rise from $3,400 to $4,600.
To offset the revenue loss, the bill would eliminate most tax credits, exclusions and deductions except some of those claimed by the majority of the taxpayers. The exceptions include charitable giving, home mortgage interest, certain medical expenses, state and local taxes, Social Security and veterans' benefits and interest on municipal bonds.
"Over the years the tax code has become a vehicle for political favoritism and social engineering," said Bradley, chairman of today's workshop on economic growth. "It is now far too complex. It is blatantly unfair." Under his proposal, most of the 60 million taxpayers who use the standard deduction will pay less than now, he said.
Rep. Harry S. Reuss (D-Wis.), said the beauty of the Bradley-Gephardt bill, which is to be formally introduced in Congress within a few weeks, is that it avoids the perrennial pitfall of taking on tax reform piecemeal. "Many of us have been stubbing our toes for 20 years trying to plug those loopholes."
"Everyone is for tax reform but no one wants to give up his or her special loophole," added Sen. Gary Hart (D-Colo.). "To really reform, you've got to get outside the system and start all over again. This bill goes a long way toward putting the party back on track in terms of leading the economic debate."
The workshop did not specifically endorse the bill, but adopted language tailored to the proposals in it by embracing the goals it is designed to achieve.
Similarly, the workshop adopted an amendment offered by Sen. Christopher J. Dodd (D-Conn.) that, though broadly worded, was intended to give a boost to a pay-as-you-go approach to congressional budgeting that was offered on the floor of the House last month by Rep. George Miller (D-Calif.)
Under the Miller bill, Congress, before it can authorize any new spending, must also provide up-front the new sources of funds to pay for it.
Because the plan would freeze spending at current levels and require budget cuts and/or new revenues to fund any new programs, it raised some eyebrows among those who think the current mix in the federal budget is tilted too much in favor of guns over butter. But debate was brief, and little opposition surfaced.
Among the other key amendments to the economic policy paper adopted yesterday were resolutions rejecting a constitutional balanced budget amendment, calling for a cap of $700 per taxpayer on the fiscal year 1982 and 1983 tax cuts and proposing elimination of the so-called tax leasing provisions adopted last year. The workshop also approved a block of amendments promoting the idea of equal pay for women for work of comparable value.
While the economic panel was flirting with new ideas, it did not stint on attack. Most of the draft report on the economy was a bill of horrors against a Republican economic program that "has drawn a safety net around a small, wealthy minority while working families, the elderly poor, children from disadvantaged homes and members of minority groups have fallen through the holes."
Nowhere was the attack mode more in evidence today, however, than in a panel on energy and the environment. Party leaders there spent the day celebrating their opportunity to "capture the center of American thought," in the words of Rep. Albert A. Gore Jr. (D-Tenn.). Before they met formally, they heard pollster Peter Hart tell them that by a margin of 67 percent to 18 percent, Americans favor more stringent laws protecting the environment; that by a margin of 64 to 14 they believe the Democrats are committed to those goals and that by 53 to 27 they believe that the Republicans support relaxing the regulations.
"(Interior Secretary James) Watt is the Kryptonite around the neck of the Republican Party," Hart said.
"The Republican policies on the environment aren't moderate and they aren't conservative; they're violently radical," former vice-president Walter F. Mondale told the environment workshop. "Don't just pick on Watt . . . pick on the guy who went all over the counry to find him."
The policy statement on energy and the environment dismisses the Reagan policies as aberrational and calls for a return to what it described as the bipartisan consensus that existed in those areas before 1981.