Senate Finance Committee Chairman Robert J. Dole (R-Kan.) said yesterday that he would not act on any broad-based tax increase measure until enforcement of existing tax law is tightened and existing loopholes are reexamined.
In a challenge to congressional Democrats who are clamoring for limitations on the third-year personal income tax cuts scheduled to take effect July 1, Dole said "there is no reason for raising taxes or taking away the tax cut until we have improved tax compliance and tightened up some of the generous 'tax breaks' " in the current law.
New revenue to reduce the anticipated 1984 budget deficit, he said, "should come from tax reform, not tax increases."
Sentiment in his committee against a broad-based tax increase is so strong, Dole warned in remarks to a business meeting in Portland, Ore., that if the House-Senate conference on the fiscal 1984 budget that begins next week produces a spending plan calling for "unrealistically high taxes, the result may be no revenue increase at all."
Rather than endorse any revenue measure, Dole has scheduled six days of hearings on administration-sponsored domestic spending reductions, "tax compliance improvements" and "tax expenditures," or revenue-reducing deductions and exemptions for individuals and corporations.
This last category, Dole said, is intended as a broad review of all "tax expenditures." Entrenched popular favorites such as the deduction for home mortgage interest, which will cost the Treasury an estimated $27.9 billion in 1984, are unlikely to be touched, aides to Dole said, but "the special tax breaks enjoyed by certain individuals or businesses" will be scrutinized.
The Senate's Republican leadership has already agreed to let the Democrats bring up a measure, to be drafted by the House Ways and Means Committee, that would put an income ceiling on the July tax cut.
Unless the Democrats can persuade several Republicans to break with the Reagan administration and support such a measure, however, it has little chance of enactment, and Dole's move yesterday reinforced the prevailing opinion in Congress that no broad-based revenue increase measure will be enacted this year.
Ways and Means Chairman Dan Rostenkowski (D-Ill.) "recognizes that the politics are difficult for getting a repeal or cap on the third year cut to the desk of the president," a House source said.
Even if the July 1 individual tax cut were limited to $700, it would increase federal revenues by only about $6 billion in 1984. This is a small fraction of the anticipated $174 billion deficit, but no other large-scale revenue increase measure is pending.
Rostenkowski, unlike other leading House Democrats, has not endorsed a tax cut cap. House Majority Leader James C. Wright Jr. (D-Tex.) renewed the Democratic attack on the third-year cut yesterday, calling it a "tax cut for the wealthy, paid for with borrowed money."