President Reagan defended his controversial proposal to end the deductibility of state and local taxes here today, charging that the current system favors the nation's "high-tax" states.
Beginning a two-day trip that mixes campaigning for his tax revision plan with politicking for three Republican senators facing reelection next year, Reagan sought to pit low-tax against high-tax states in the battle over ending state and local tax deductions, a key revenue-raising part of his plan.
"Two-thirds of Americans don't even itemize, so they receive no benefit from the state and local deduction," Reagan told an estimated 4,000 employes of an American Telephone & Telegraph Co. high-tech facility here. "Yet, it is this majority that is now subsidizing a handful of high-tax states."
Reagan did not name the high-tax states, but many are in the Northeast and Midwest, and many officials from those regions have accused the administration of drafting a tax plan deliberately tilted toward the South and West. Today Reagan turned the argument back on his critics, charging that the high-tax states receive an indirect subsidy from such low-tax states as Oklahoma, Texas and others.
"Some state governments outside Oklahoma have not yet learned to say 'no' to special-interest groups and higher taxes," he said. "I don't think the people of Oklahoma . . . should be forced to pay for their lack of resolve."
In Reagan's tax revision bill, eliminating the state and local tax deduction would raise an estimated $30 billion annually -- revenues that are essential to offset the loss from lowering overall tax rates and to maintain some of the bill's tax preferences for business.
The issue is both economic and political, with the Republican Party seeking to boost its strength in the South, the region showing the strongest increase in GOP voting patterns in recent elections.
Reagan, whose widest margins in last year's reelection were in the South and the Rocky Mountains, campaigned today for the reelection of Sen. Don Nickles (R-Okla.) here and for Sen. Mack Mattingly (R-Ga.) in Atlanta. He is scheduled to go to Birmingham on Thursday for a fund-raiser benefiting Sen. Jeremiah Denton (R-Ala.).
The three freshman senators are among 22 Republicans facing reelection in 1986, and their fate will help determine whether the GOP maintains its Senate majority.
Each of the three senators represents a traditionally Democratic state that gave Reagan at least 60 percent of its vote last November.
In his Atlanta and Oklahoma City speeches, Reagan was noticeably less partisan than he was on a Memorial Day trip to Florida in behalf of Sen. Paula Hawkins (R-Fla.), another GOP freshman facing reelection. On that trip, he accused Democrats of attempting to divide the nation by race, age and sex.
Without directly attacking Democrats yesterday, Reagan argued in Atlanta that "what we are witnessing is a realignment of southern politics. A new coalition is being built."
In a token gesture to the Democratic Party, Reagan said that "Joined by concerned members of the other party, we are laying the foundation for a new era of prosperity and good will" by taking up tax reform and tax simplification.
Reagan pushed his tax bill at every stop, describing it as a "revolution for fairness, because everybody will have to put their shoulder to the wheel; for opportunity, because lower tax rates will encourage capital formation . . . and, yes, a revolution for hope, because a more productive, competitive, dynamic economy will mean lower inflation, stronger growth and more jobs."