House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.), poised to push his panel through its toughest week of tax writing, conceded yesterday that his package probably will not cut the top personal tax rate to 35 percent as President Reagan wants.
The current top rate is 50 percent.
Reagan has repeatedly insisted he will not accept a reduction of less than he has proposed.
The Ways and Means panel has cut back on tax benefits more than Reagan suggested in some areas, but has made new compromises in others. Each compromise makes it harder to raise enough tax revenue to offset the cost of lower tax rates without increasing the federal deficit.
"I don't know that I will be able to control that in the committee," Rostenkowski told reporters when asked about tax rates. "But my gosh, I wouldn't want -- and I'm sure the president wouldn't want -- us to lose the opportunity to write history in as large a document as this over one or two percentage points."
He also predicted that the House will act on tax revision before its Christmas recess, now scheduled for Dec. 13.
Given yesterday's committee actions, that schedule will be tough to meet. The panel recessed after meeting all weekend without finishing all the items on its agenda and will not meet Monday while task forces debate on tax credits for research and other areas.
Yesterday, the committee voted to preserve a special tax break for commercial shipbuilding that Reagan and Rostenkowski had wanted to repeal. It also agreed to tighten and extend a tax credit subsidizing employment of disadvantaged workers that had been scheduled to expire at the end of this year. Together, those actions would cost $1.4 billion over five years.
Starting Tuesday, Ways and Means will have to grapple with much stickier and more expensive issues than the provisions it has approved. Among them: business write-offs for investment, the deductibility of state and local taxes for individuals and a stiff minimum tax on corporations and individuals.
Because each of these issues involves large amounts of federal revenue, even minor concessions could prove costly.
Rostenkowski told reporters before the session that he hopes the committee can set tax rates before Congress leaves for its Thanksgiving recess so that the following week can be used for drafting. The package could then be sent to the House Rules Committee during the first week in December. Rostenkowski said House Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.) had promised to bring the tax package up before the recess.