House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.), staking out territory for the House-Senate conference on overhauling tax law, said yesterday that he would accept the Senate's 27 percent top tax rate for individuals if Senate negotiators would grant as much tax relief to middle-class taxpayers as the House bill does.
His offer includes a catch: To achieve his goals without reducing the amount of federal revenue collected, senators probably would have to give up cherished corporate tax breaks retained in their legislation.
Rostenkowski indicated yesterday that he is aware of the price. In prepared remarks for an economic policy seminar in Boston, he listed business tax benefits that were curtailed by the House but retained by the Senate covering defense contractors, oil and gas producers, large banks and manufacturers.
"Given a hard look, I hope the Senate conferees will find our corporate reforms as worthy as the House conferees find some of the Senate's individual reforms," Rostenkowski said. "In the end, the real fight won't be between the House and Senate, but between corporate lobbyists and the middle class."
The Senate tax bill, passed 97 to 3 earlier this week, would raise business taxes by $100 billion over the next five years and cut individuals' taxes by the same amount. The House legislation, approved last year, would transfer about $140 billion in taxes from individuals to corporations. Its top tax rate is 38 percent, while the current top rate is 50 percent.
House Democrats have been signaling that tax relief for middle-class taxpayers would be their most important priority in the forthcoming conference. According to Rep. Richard A. Gephardt (D-Mo.), "middle class" reaches those earning up to $60,000 a year. Only 3.3 percent of all tax returns show adjusted gross income higher than $50,000 a year.
Under most definitions, the Senate bill gives a smaller average tax cut to middle-income earners than does the House version. Gephardt released figures earlier this week showing that the Senate's average tax cut for those being paid between $30,000 and $40,000 would be $129 during the first year, while the House bill would give the same taxpayers a reduction of $301.
"The key issue will be whether the House conferees can hold their bill to protect the individual," Gephardt said.
In his remarks yesterday, Rostenkowski predicted that the House-Senate conference could go on for a month or so, "even working in perfect harmony." It is scheduled to begin shortly after Congress returns July 14 from its Fourth of July recess.
Meanwhile, the Chicago Sun-Times reported yesterday that Rostenkowski is contemplating retirement from Congress after one more two-year House term. Rostenkowski was quoted in an interview with the newspaper as saying that he was interested in leaving while he could still "get on some boards" of corporations. "If I stay here past 65, I'm just a former congressman," he was quoted as saying.
Rostenkowski aides said the sentiments laid out in the article appeared to be consistent with the Ways and Means chairman's views, although he is concentrating this year on tax revision. Rostenkowski has expressed little interest in being committee chairman if House Majority Leader James C. Wright Jr. (D-Tex.) succeeds retiring Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.) next January, as is considered likely.