President Reagan's call for tax simplification won a strong, if qualified, endorsement from House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) last night, but two leading congressional supporters of tax simplification said they will oppose the president.
Rep. Richard A. Gephardt (D-Mo.), cosponsor of a Democratic tax-simplification plan, denounced Reagan's proposal as a "tax retreat."
Rep. Jack Kemp (R-N.Y.), cosponsor with Sen. Robert W. Kasten Jr. (R-Wis.) of a Republican tax overhaul bill, said the top tax rate of 35 percent is too high.
"I cannot support the plan as long as the top income tax rate remains at 35 percent," Kemp said. "Keeping the rate at 35 percent would unnecessarily sacrifice jobs, investment, economic growth and revenues."
But Sen. Bill Bradley (D-N.J.), cosponsor with Gephardt of a Democratic alternative, said in a statement that he was "elated" by the president's proposal to revise the tax code.
Rostenkowski, in the Democratic response to the president, praised Reagan for "bucking his party's tradition as protector of big business and the wealthy," and said if the plan measures up to its advance billing, it will enjoy strong Democratic support.
But he warned that Congress will make certain it is fair to average taxpayers. "Democrats will not . . . give the president's reform plan a rubber stamp," Rostenkowski said. "If anything, it's a starting point. We will make some changes -- correct some imbalances -- seek to make it fairer."
The Chicago Democrat called on the public to speak out in support of tax simplification to overcome the opposition of "legions of special interests," saying people should "just address it to R-O-S-T-Y, Washington, D.C."
"If you've never stood up for your rights as a taxpayer, if you've never voiced your frustration and anger over the unfairness of today's tax system, sit down and write a letter to Washington . . . . And stand up for fairness and lower taxes," Rostenkowski said.
Gephardt, who made his views known in a letter to all Democratic House members and governors, said the Reagan plan no longer represented "reform and simplification."
"As opposed to this earlier Treasury package, what the president will propose is to fund the special interests out of the pockets of the middle class," Gephardt said.
"Not only has the delay in introducing the package hurt the chances of coming out with a bill this year, but the sellouts the president made -- oil and gas, depreciation, capital gains and other areas -- must be paid for by someone," he added.
Bradley, however, took a different approach. "Tonight, the president has committed himself to supporting tax reform and explaining what it means to the American people . . . that will move the whole process and chance for tax reform a giant step forward."
Senate Majority Leader Robert J. Dole (R-Kan.) said changes made in the original Treasury proposal heightened the plan's prospects in Congress. In a statement, Dole said the new plan "includes more incentives for investment and capital formation" and will speed through Congress in part because of those changes.
"This plan is a huge advance in the direction of greater fairness for all taxpayers and greater economic efficency -- it's a courageous and historic initiative," he said.
Senate Finance Committee Chairman Bob Packwood (R-Ore.) said he was "all in all, quite well pleased" with Reagan's proposal, adding "prospects for passage this year are excellent."
Rep. Robert T. Matsui (D-Calif.) expressed surprise at Gephardt's criticism. "I don't know what he's up to, but it's my feeling that Democrats, especially those that favor tax reform, should not be attacking the president's plan before we know the details," he said. "I just don't think it's appropriate right now, especially when some people would call it a reasonably credible proposal."
Sen. Gary Hart (D-Colo.) welcomed Reagan aboard what he called "the Democratic bandwagon for tax reform," but said Democrats would watch closely to see "whether the reality matches the rhetoric."
Hart added, "rest assured -- if the president's plan is a gift horse for working Americans, my party will be the first to support it; but if it is a Trojan horse for special interests, we must be first to expose it."
Rep. Bill Frenzel (R-Minn.) said the new package "seems to be an improvement, particularly politically. But it still has plenty of controversy left in it. It ameliorates the pressures on some groups that were probably going to win out anyway," such as charitable organizations and small business.
Matsui said, "I think the proposal is pretty solid right now. They clean up a lot of problems that they have politically. Those political changes had to be made. We would have done them if he didn't do them."
Republican National Committee Chairman Frank J. Fahrenkopf Jr. said Reagan's tax proposal "will go a long way towards making the Republican Party the majority party in this country."
Reaction from interest groups, which have been lining up against tax reform for months, was, as expected, swift and sharp.
E. Wayne Thevenot, president of the National Realty Committee, a trade group of the nation's largest commercial real estate developers, said Reagan's proposal "will likely mean a drop in property values in the short term, and inevitable increases in rents in the long term, a bar to entry for middle-class investors and a general drop in real estate activity in this country."