The Reagan administration appealed to the nation's mayors today to support its tax-simplification plan, arguing that the revenue the federal government would recapture from states and municipalities is an essential financial component of the plan.
"Lunch is never quite free," and some "more prosperous city residents" would pay more under the tax-simplification plan, White House aide Mitchell E. Daniels Jr. told the mayors.
But big cities in general and poor city-dwellers in particular would be among the major winners if the plan is approved, he said.
"Greater fairness and simplicity in the tax system will produce social cohesion and public confidence, and nowhere would those developments be more important than in our largest cities," Daniels told a luncheon audience at the 53rd annual meeting of the U.S. Conference of Mayors.
Daniels, the White House director of intergovernmental affairs, said there is "understandable" but "unfounded concern" that the plans' proposal to eliminate federal deductibility of state and local taxes would "step up pressure on local budget-makers" and make it more difficult to raise taxes.
Moreover, he said, it would be virtually impossible to keep the tax-overhaul plan "revenue neutral," as President Reagan has promised it would be, without keeping the deductibility provision intact.
"Lower rates, doubled exemptions, special relief for the poor, greater fairness, economic growth -- none of these goals can be reached," Daniels said, "without the revenue, some $30 billion of it, recaptured by repeal of deductibility."
Daniels ventured into a political lion's den here, along with Housing and Urban Development Secretary Samuel R. Pierce Jr., who spoke earlier.
Many of the mayors said they believe that Reagan's 1986 budget proposals were particularly hard on cities, and the organization has formed a relatively strong bipartisan opposition to key elements of his proposed tax-simplification plan.
"The president's proposals are about to land on us like the second punch in a one-two combination," said New Orleans Mayor Ernest N. (Dutch) Morial (D), the conference president.
"If both budget and tax reforms go through as proposed, a lot of us will be knocked out of this fight. We cannot let this happen," he said.
On Sunday, the resolutions committee of the organization, which represents chief executives of cities with populations of 30,000 or more, solidly endorsed statements opposing the repeal of state and local deductibility and supporting retention of tax-exempt status of municipal bonds.
The full conference is to vote on the resolutions Wednesday.
The five-day conference began Saturday and has produced less partisan political sparring than did the group's annual midwinter meeting in Washington five months ago. The group is two-thirds Democratic.
Many Republican mayors have joined Democrats in opposing parts of the tax plan and in supporting a resolution accusing the Justice Department of trying to "dismantle affirmative-action plans developed by cities."
Many of the 164 mayors here attribute that change in tone to better political groundwork by the Democrats and to a growing worry that parts of the tax-simplification plan are more threatening to cities than the administration's proposed budget cuts, the major topic of discussion in January.
Pierce and Daniels were the only administration officials to appear before the conference. Their remarks were received with polite applause.