The Reagan administration tax plan could provide a modest boost for economic activity in the next few years, but may also mean substantial losses of federal government revenue over the longer term, according to a number of tax economists.
If the economists are right, the tax plan could produce another effect: new pressure on Congress to cut federal spending to offset lost revenue that could reduce further the size of the government's domestic programs, long a Reagan goal.
The economists warned that, even if passed exactly as proposed by President Reagan, the estimated increase in total taxes paid by businesses in the future could disappear while the overall reduction in personal taxes remained. The likelihood of the proposal passing intact is small, however.
The plan is billed as "revenue neutral," but the estimate of revenue rests on several provisions that are under attack or are transitory.
A huge number of lobbyists are expected to try to persuade Congress not to raise business taxes so much in the first place.
Should the legislators go along, or should they refuse to adopt any of the other major revenue-raising measures such as elimination of deductions for state and local taxes claimed by individuals, the plan's attempt to keep revenue from falling could be jeopardized even in the short run.
President Reagan, in his Tuesday night speech, heightened this concern on the part of some analysts by declaring, "We want to cut taxes, not opportunity" -- putting the emphasis on cutting taxes rather than keeping revenue at present levels.
The White House, in its official summary of the plan, said that the Treasury Department estimated that the proposals would "cause real gross national product to be at least 1.5 percent higher by 1995 than it would be under current law."
However, top Treasury officials yesterday were unable immediately to provide additional details of that calculation of a higher GNP, which would be the equivalent of adding about 0.1 percentage points to each year's growth rate over the next 10 years.
"The plan is somewhat pro-growth," said Charles R. Hulten, an economist at the Urban Institute. "But it's not going to cause a big effect either way."
Hulten and several other tax economists yesterday claimed Reagan's tax proposals fall well short of being a neutral, inflation-proof scheme that would encourage taxpayers to make investment choices entirely on their economic merits rather than on the basis of those merits plus their tax consequences. Compared with current law, however, it moves the tax code in that direction, the economists said.
"Anything you can do to reduce the gross inequity in rates of tax across industries is good," said Henry Aaron of the Brookings Institution.
But he added that the original Treasury proposal of last November "would have got rid of a lot of distortions" that the president's plan leaves in place.
Hulten and other analysts said that if the Reagan proposal loses revenue in the long run, it could worsen future federal budget deficits and offset any positive impact from the reform plan.
The positive effects "pale beside the negative consequences of the deficits" for interest rates, trade and other aspects of the economy, he said.
Contrary to most expectations, Hulten's analysis indicates that the present value of the tax write-offs for business investment in new equipment and structures proposed by Reagan actually is more generous than that provided under current law. (Present value is an economic concept that takes into account expected inflation by regarding a dollar to be received at some future time as worth less than a dollar received today.) However, more of the investment write-off would come in the later years of an asset's useful life, so the increase in value of the depreciation charges would build sharply in the future. Rising depreciation claims are treated as costs by businesses and therefore reduce profits and taxes paid by businesses.
A number of tax experts also foresaw no large economic gain from simplification of the current code because some simplifications in the Reagan plan were matched elsewhere by new complexities, particularly for corporations.
Emil Sunley, a deputy Treasury secretary for tax policy in the Carter administration now with the accounting firm Deloitte Haskins & Sells, said, for example, that the attempt to recapture some of the windfall gains that would accrue to companies as a result of the interaction of accelerated depreciation in the recent past and the prospective cut in the corporate tax rate from 46 percent to 33 percent is going to make "every firm get out a sharp pencil. . . . It will be a very divisive feature within the business community."
None of the analysts were optimistic about curbing the appeal of investments that may be uneconomical but provide significant shelter for income from other sources. "That was the expectation in 1981" when the top individual income tax rate was dropped from 70 percent to 50 percent, said the Urban Institute's Hulten. "I am not sure I would want to make the case it will this time."
Investments in such shelters as real estate syndications burgeoned even after the top rate was cut, according to the Internal Revenue Service. Prospective curbs on shelters also have been lessened by an administration retreat on several shelter-limiting provisions contained in the original Treasury proposal, the economists said.
Hulten said he based his expectation of a small boost in economic activity on an analysis of the combination of proposed changes in the taxation of income from corporate capital assets of corporations. The combination -- including repeal of the 10 percent investment tax credit for equipment, a new schedule for business write-offs of the cost of capital investments (depreciation), more preferential treatment of capital gains, a new 10 percent deduction for dividends paid, and the drop in corporate tax rates -- likely would mean that corporations would seek a one-time 5 percent increase in the desired level of the nation's total stock of capital