President Reagan pressed forward today with his campaign to redesign the tax system amid frequent and highly visible reminders of public concern about the fate of the 40 American hostages held in Lebanon.
In remarks to a group of businessmen at Mac's Family Restaurant in Mooresville near here, and later in a speech to the U.S. Jaycees, Reagan denied that his tax plan provides excessive benefits to the wealthy, as some Democrats have charged.
Although the White House hoped to demonstrate today that Reagan could conduct business as usual during the hostage crisis, the president was reminded in different ways about the Americans held in Beirut.
Yellow ribbons were waved in the air as his motorcade passed crowds. One person held up a sign, "Nuke Beirut." Another sign said, "Stop the Terrorists from Taking America Hostage."
After his speech to the Jaycees, Reagan and White House chief of staff Donald T. Regan met privately backstage for five minutes with the family of hostage James Hoskins Jr., 22, of Indianapolis. Aides said that Reagan told them his efforts to free the captives were complicated by the lack of a government to deal with.
Answering shouted questions from reporters earlier, Reagan said he has been "praying ceaselessly" for the hostages and their safety.
Reagan continued to refer to the captives as "prisoners," not hostages, and wrote an insert into his speech to the Jaycees declaring, "We will not cave in" to terrorist demands.
The crowd of 5,000 Jaycees waved American flags and chanted in response, "U.S.A.! U.S.A.!"
Reagan was not asked about the hostages in a brief question-and-answer session with the businessmen in Mooresville, and his exchange with reporters was terminated when the White House sound system and television lights were abruptly turned off.
"They turned out the lights," Reagan said. "That tells me I can't talk anymore."
On taxes, Reagan appeared suddenly uncertain today when questioned by a Mooresville businessman about how his plan would simplify the tax laws.
"Wow," Reagan responded, hesitating and turning to Regan. "For me to try and off the top of my head bring up some of the other benefits, now wait a minute."
He then went on to defend his plan to eliminate the deduction for state and local taxes, a major battleground in the tax debate. Reagan said that with lower rates, "everyone still gets a tax cut even without that deduction."
Overall, however, the administration's own projections have shown that some taxpayers will get a cut and others will pay more taxes under the plan.
Reagan also repeatedly asserted that his plan does not provide excessive benefits to the wealthy.
"Some say that . . . we must raise the top tax rate higher than 35 percent so the rich pay more," Reagan said, referring to a suggestion made recently by House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.).
"But that argument misses the central point of what we're doing," Reagan said. "We're not lowering the top tax rate to 35 percent so the rich will do better. We're lowering the top rate to 35 percent so that every working American will have a better chance to get rich."
"Some people have been throwing around that this favors the rich," Reagan told the Mooresville businessmen, adding that only 3 percent of taxpayers will be in the top bracket of 35 percent, but they will pay 14 percent of government's total tax revenue.
"So it is not benefiting them, and yet they too, will get a reduction," he said.
Reagan also said his plan had the virtue of keeping the tax code progressive, with rates rising with income levels. For example, he said, a taxpayer earning $420,000 a year would pay 30 times as much tax as a middle-class family of four earning $42,000 a year, or one-tenth the income. "So that worked out pretty well," he said.
This marks a shift for Reagan, who, while in Europe last month, criticized the progressive nature of the U.S. tax code.