President Reagan, reading from the Bible and citing numbers that show the economy is improving, yesterday denounced Democratic attempts to put a cap on his tax cut as "a jobs-destruction bill" that would "cut off our nose to spite our face."

In a speech to the National Federation of Independent Business, Reagan also took after the congressional budget resolution compromise for fiscal 1984 that calls for higher taxes and cutting by half the rate of his proposed defense buildup.

The president said it is "not good enough to reduce the deficit on paper when, in reality, you're running up the white flag on controlling domestic spending . . . . If they can't get that through their heads, then I am prepared to veto their budget-busting bills again and again and again." Reagan was cheered by the luncheon crowd of businessmen, many of whom have been among the biggest beneficiaries of the president's three-year, individual tax cut. The Democratic congressional leadership is trying to limit to a maximum of about $700 the third and final phase of the tax cut, 10 percent scheduled for July 1.

Reagan praised the small businessmen throughout his address, calling them the "forgotten heroes of America."

"We hear so much about the greed of business," the president said. "Well, frankly, I'd like to hear a little more about the courage, generosity and creativity of business. I'd like to hear it pointed out that entrepreneurs don't have guaranteed annual incomes . . . . Just think about it--in the Parable of Talents, the man with the small business spirit who invested and multiplied his talents, his money, was praised."

Reagan then trumpeted his economic policies, citing recent numbers that show inflation and the prime interest rate down, the stock market and housing starts up, factories operating at their highest capacity in the last 15 months, automobile and steel production increasing and unemployment slowly dropping.

Then Reagan accused the Democrats of trying to slow the recovery in the name of fairness but in reality hurting the middle class.

"Just as everything is starting to mesh, just as Americans have spotted the dawn of a new age--strong growth without a return to runaway inflation and interest rates--the guardians of a graveyard philosophy want to resurrect ideas which should remain dead and buried for all time . . . ," Reagan said. "It's called Americans make, government takes."

"Capping the third year of the tax cut won't soak the rich, but it will drown millions of taxpayers in the middle class," he continued. "The wealthiest earners with incomes above $110,000 got their full tax cut in 1981."

Reagan said a cap on the tax cut would "raise taxes on 2.4 million small businesses, including 350,000 family farms, which file personal, not corporate, tax returns. These people will invest in the new jobs, products and technologies for the 21st Century . . . . Putting a cap on small business would put a cap on our recovery and future growth."

House Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.) responded to Reagan's speech by saying his proposed cap is a "fairness bill," and castigating Reagan's tax program as a "windfall for the rich."

Meanwhile, House Democrats, expressing increased optimism about the outlook in the House for the budget resolution compromise, planned to vote on it today and Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) predicted it also will pass the Senate.

"It looks comfortable . . . we're confident," said a House budget aide, despite earlier concern about the possibility of liberal as well as conservative defections.

"Frankly, every time the administration opens its mouth on the issue the support gets stronger over here," said Rep. Leon E. Panetta (D-Calif.).

Still in doubt yesterday was the position of Majority Leader Howard H. Baker Jr. (R-Tenn.) and Finance Committee Chairman Robert J. Dole (R-Kan.), who are under conflicting pressures from Reagan and Domenici over supporting the budget compromise.

While he takes Reagan's opposition into account, Baker said, he will be influenced more by advice from affected committee chairmen, especially Dole, and said he intends to talk further with them.

"I revere, respect and honor my president, but I want to talk to my committee chairmen. They're the ones I listen to," Baker added.