The Senate Finance Committee capped a 17-hour session early this morning with an 11-to-9 party-line vote to approve $21 billion in new taxes for 1983 for cigarettes, federal employes, incorporated doctors and lawyers and many other interests.
The proposal is expected to go the full Senate after the holiday recess.
With corporate lobbyists packing the committee chamber and overflowing into the hallway, the panel voted unanimously to cut back sharply on corporate tax leasing to save $7.6 billion over three years.
The action, however, represented a victory for companies that do not pay taxes and are supposed to benefit from the controversial provision. Although restricted, basic tax "leasing" would be allowed to continue.
Earlier, the fragile GOP majority held together after the panel first rejected the largest tax--a requirement that banks, savings and loans and other financial institutions withhold 10 percent of dividends and interest income--by a 12-to-7 vote as four Republicans voted against and one Democrat abstained.
After an arm-twisting session in the office of committee Chairman Robert J. Dole (R-Kan.), three defecting Republicans were brought back into the fold and the withholding proposal, which would raise $4.2 billion in 1983, was approved, 11 to 9. The withholding provision was a key element in the tax package, providing 20 percent of the $21 billion mandated by the budget resolution enacted earlier this year.
In a private caucus Wednesday, the 11-member GOP majority agreed to the withholding plan, but last night Republicans John H. Chafee (R.I.), John Heinz (Pa.), David F. Durenberger (Minn.) and Charles E. Grassley (Iowa) voted against the measure, along with eight Democrats, infuriating Dole, who thought he had a firm commitment from his GOP colleagues.
Shortly afterwards, Dole called all 11 GOP members back to his office. After two hours behind closed doors, only Chafee continued to oppose the withholding proposal.
Before the recess, the panel approved tax increases including:
* A requirement that federal employes contribute to the Medicare system. If enacted, federal workers will pay 1.3 percent of their wages up to a ceiling of $32,400 into the old-age health coverage system. The tax would cost federal employes $600 million in 1983.
* A doubling of the tax on cigarettes from eight to 16 cents a pack. This would raise $1.2 billion in 1983.
* A taxpayer-compliance package that would require restaurants to give the Internal Revenue Service an estimate of the tips received by waiters and waitresses, and would establish a reporting system for many capital gains transactions, nearly half of which are never reported.
* The 1 percent telephone excise tax would be raised to 2 percent in 1983 and 3 percent in 1984.
* The minimum tax for wealthy individuals would be expanded so that an estimated 200,000 people would have to pay $200 million more to the federal government in 1984 and $300 million in 1985.
This last proposal was sparked by an unusual debate that saw Republican senators repeatedly attack the current system, which allows some taxpayers to avoid paying taxes altogether, while some of the Democrats attempted to maintain tax preferences, particularly the tax exemption for municipal bonds, which allow some people to avoid paying the IRS anything.
As Sen. Russell B. Long (D-La.) struggled to maintain the full tax exemption for income from municipal bonds, Chafee countered: "We just cannot tolerate a system in which some people get away with paying no tax."
Republicans have repeatedly acknowledged that the Reagan administration's 1981 tax bill has resulted in a growing public perception of the GOP as favoring the rich at the expense of the poor.
The business taxes approved include elimination of a special tax break for the insurance industry, which would raise $1.5 billion next year; restriction on the tax benefits to corporations constructing non-residential buildings, which would save $500 million; elimination of special tax deferrals for the defense industry and other multi-year contractors, which would save $800 million, and elimination of a number of tax breaks that members of Congress believe encourage corporate mergers, which would raise $700 million.