The Senate Finance Committee's tax-overhaul bill would produce dramatically different amounts of revenue from one year to the next compared with the current tax system, raising a surplus of more than $20 billion in its first full year of operation, according to congressional estimates.
Final estimates were to be computed last night, but congressional and administration sources confirmed that the calculations show surpluses and shortfalls of as much as $25 billion a year. The sources said these peaks and valleys balance to produce the same amount of revenue over a five-year period as would the existing system.
Supporters of tax overhaul have expressed concern that significant revenue swings could pose problems for the bill, which the Senate is to begin debating Wednesday.
But Treasury Secretary James A. Baker III said yesterday that the Reagan administration likely will not try to smooth out revenue variations on the Senate floor.
The administration has joined Finance Committee Chairman Bob Packwood (R-Ore.) and Senate Majority Leader Robert J. Dole (R-Kan.) in trying to move the bill quickly through the Senate, in hopes of heading off amendments that appear to have broad support.
These include proposals to preserve tax breaks for capital gains, Individual Retirement Accounts, state and local sales taxes, real estate and consumer interest.
President Reagan has scheduled an unusual breakfast meeting with all 100 senators at the White House next Thursday and plans to urge them to forgo offering amendments on the floor in order to preserve the committee package and its maximum individual tax rate of 27 percent, according to several officials.
"The message will be that this package is fragile and it could fall apart, and it's too good to let it fall apart," one official said. The administration prefers that changes be made in a House-Senate conference committee, rather than on the floor, according to Baker.
The breakfast session is scheduled the same day as the Senate's planned vote on Reagan's veto of a resolution disapproving an arms sale to Saudi Arabia. Officials said the breakfast was arranged before the vote was scheduled.
Packwood and other Finance Committee members are devising a floor strategy mirroring one they used successfully to defeat potentially crippling amendments in the committee. This involves assembling a sizable minority united against changes, supplemented by a coalition whose members shift from one issue to the next.
Committee chief of staff Bill Diefenderfer said Packwood and others have recruited 30 "solid supporters" committed to opposing almost all amendments on the floor.
Dole has announced that debate will begin Wednesday, with significant votes not planned until at least the following week.
Hill and administration sources said final revenue estimates should fall within $2 billion of figures reported in yesterday's Wall Street Journal. These include an $8 billion surplus in 1986 compared with current law, followed by a $26 billion surplus in 1987, shortfalls of $22 billion in 1988, $23 billion in 1989 and $2 billion in 1990, and a surplus of $13 billion in 1991.
The large surpluses in 1986 and 1987 would be produced by repealing the investment tax credit, delaying rate cuts until July 1987 while immediately ending numerous tax benefits and collecting taxes on the anticipated sale of assets by investors seeking a favorable rate for capital gains. The bill would repeal the capital gains break next Jan. 1.