President Reagan accepted a far-reaching tax-simplification proposal yesterday, and will launch it next Monday with a nationally televised address emphasizing its "populist" aspects, administration officials said.
Reagan approved most aspects of the plan -- which includes a doubling of the personal exemption to $2,000, lower individual tax rates and the elimination of many popular tax breaks -- at a White House meeting with Treasury Secretary James A. Baker III and other senior officials. A final meeting is scheduled for today.
Officials said the Reagan proposal will include a three-tier individual income tax rate structure: 15 percent for low incomes, 25 percent for middle incomes and a top bracket of 34 or 35 percent.
The officials said there was discussion yesterday of bringing the top bracket down further, possibly to as low as 30 percent, or perhaps adding a fourth bracket at 30 percent, but those ideas were set aside.
The Reagan plan is also expected to include a minimum tax for corporations.
Earlier, administration officials had discussed raising the personal exemption from $1,040 this year to $1,800. The decision taken yesterday to make it $2,000, officials said, would help Reagan emphasize the "populism" theme because it represents an added tax cut for millions of Americans.
Officials said Reagan will try to sell the tax proposal as both a break for average taxpayers and a heavier burden for wealthy Americans and corporations that have paid no taxes in the past.
But this effort to cast the new plan as "populist" may run into criticism because Reagan has also decided to restore a number of tax breaks for investors and the oil and gas industry. These tax breaks were curtailed in the Treasury Department's initial tax-simplification proposal released last year.
In an effort to give the proposal some political momentum, the president is planning to "get out and really sell it fast" next week, an administration source said, with events almost every day that will focus attention on the benefits for families and for average taxpayers.
Reagan intends to advertise the tax-simplification plan as the centerpiece of a "Second American Revolution" he described in his second Inaugural Address, officials said. Republican political strategists said they are looking to the tax-simplification campaign to give Reagan a positive issue to campaign for after recent difficult controversies that put the White House on the defensive.
The president can use tax simplification to "wash away some of the bad taste of the budget" fight, as well as the controversy over his visit to the German military cemetery at Bitburg, one Republican official said.
Administration officials said Reagan's campaign for the tax plan begins Monday with a televised speech from the White House and will continue for more than a week. Even next Wednesday, when Reagan is scheduled to address the Naval Academy in Annapolis, aides are looking for a second event to highlight tax simplification.
Last year's original Treasury Department proposal also included a three-tiered individual tax rate structure of 15 percent, 25 percent and 35 percent. But in recent days, Rep. Jack Kemp (R-N.Y.) and Sen. Robert W. Kasten Jr. (R-Wis.), authors of a major tax-simplification proposal in Congress, have urged the White House to bring the top rate below 30 percent.
Officials said this idea was discarded yesterday because the revenue loss could not be easily offset elsewhere in the plan. Reagan has pledged that the plan will be revenue-neutral, meaning that it will bring in approximately the same revenues as existing tax laws.
Kemp had also urged the White House to include the $2,000 personal exemption that is part of the Kemp-Kasten tax proposal, and was called for in last year's Republican platform.
White House officials said that they do not expect Kemp and other congressional advocates of tax simplification to embrace the new Reagan plan immediately, but that they hope it will be seen as a "framework" for producing legislation in the next few months. The administration has said its goal is to win tax simplification this year, but others have suggested that Congress may not take action until next year.
Deputy Treasury Secretary Richard G. Darman, a key architect of the new proposal, was said by officials to be working with the White House to devise a campaign for emphasizing the "populist" aspects of the new proposal.
Echoing this theme in remarks prepared for delivery last night to the Houston Chamber of Commerce, Baker said public sentiment for overhauling the tax code is "deeply rooted in populism, and populism has been an enormously influential force in America's development."
"Roughly defined, this populism is opposed to elitism, opposed to excessive concentrations of power, and oriented toward fairness," he added.
"To the extent we can improve our tax system, we will be improving government and the public's perception of government," he said. "To the extent that we fail to do so, we will be allowing a regrettable and corrosive tendency toward alienation and cynicism to persist."
Also yesterday, sources confirmed that the administration has decided to permit gifts donated to charity, including stock, to be deducted at their market value rather than at their original price plus inflation. Universities and museums had complained that the latter approach would sharply cut revenues.