Responding to White House pressure, the National Conference of State Legislatures moved today to modify its position on President Reagan's tax-revision plan.
The NCSL tax committee said in a new policy statement that its "concerns remain undiminished" over administration proposals to eliminate the deduction for state and local taxes and restrict tax-exempt bonds. But for the first time it formally endorsed tax simplification, which Reagan will try to push through Congress this fall.
The policy change, which comes up for a vote Thursday by the 5,200 legislator-delegates, was welcomed by White House aides, who had met privately with key Republican legislators before the meeting to seek the change.
But state Sen. John Marchi (R) of New York, who testified for NCSL against eliminating the deduction, insisted that NCSL had strengthened its stand against that key portion of the administration bill.
In the tax committee deliberations, Marchi and delegates from such other high-tax states as California and Maryland, voted to reaffirm an NCSL policy statement, made in May, that deductibility is necessary to preserve "the integrity of state and local tax bases" and assure them of adequate funds to meet their responsibilities.
When their move failed, they joined in the new statement pledging support for "a simpler and more equitable system of taxation which respects state and local revenue systems."
The chairman and vice chairman of the tax committee, state Sens. Neil Zimmers (D) of Ohio and James Braden (R) of Kansas, said the NCSL leadership was convinced that the White House had lined up enough votes to block the needed three-fourths majority to reaffirm the May policy statement.
When state Sen. Wayne Goode (D) of Missouri complained that the new statement was "a watered-down, weak-kneed resolution that really doesn't say anything," Zimmers said he agreed but argued that it was better than passing no policy statement.
Earlier today, the legislators heard two experts on state and local finance debate the risks of trying to torpedo the entire Reagan plan over the issue of deductibility.
Dan Heimowitz, an officer of Moody's Investors Service, which rates state and local bond issues, warned that if the administration succeeds in repealing deductibility, states could face "more frequent and more serious tax revolts" than they did in the 1970s and higher interest rates on their borrowing.
But John Shannon, the executive director of the Advisory Commission on Intergovernmental Relations, said that if states take a "no-compromise" position on deductibility and use it to derail tax-revision, then "down the road" the administration is likely to propose some form of national sales tax, which he said would represent a worse encroachment on a key source of state revenue.