Senate Finance Committee Chairman Bob Packwood (R-Ore.), with the grudging acquiescence of his fellow Senate tax negotiators, yesterday proposed a revised list of $30 billion in revenue-raising ideas that would hit business far harder than a previous Senate plan rejected by House conferees.
The proposed tax increases would fall on banks, manufacturers, utilities, farmers and timber producers. The Senate tax-revision bill already would raise the tax take from corporations by $93 billion over six years, while cutting taxes for individuals.
The increases are needed in large part because the tax-rate cuts in the Senate measure lose more revenue than is gained by the bill's limitations on individual and corporate deductions. The federal deficit would be $21.2 billion higher from 1986 through 1991 without the additional revenue.
The Senate also proposed a few changes to make its bill more generous to lower- and middle-income taxpayers, including an expansion of the tax credit for poor workers and a larger standard deduction for the elderly and blind.
"There is a strong feeling this is as far as we're going," said Packwood, who agreed with his fellow senators that the Senate has done most of the giving so far.
The House rejected half of the items on the Senate's first list, but House conferees yesterday reacted positively to the Senate proposals. "It's what I would consider darn near an acceptable offer," said House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.).
"The Senate made a good-faith effort," said Rep. Donald J. Pease (D-Ohio).
Rostenkowski said House conferees would present a slightly modified version of the proposals to senators today.
The exercise that has occupied the conference committee for the last five days has been necessary mostly to make the Senate bill bring in as much revenue as the current tax code does, and to offset the revenue lost from partially restoring deductions for individual retirement accounts (IRAs) and miscellaneous business expenses. The Senate apparently did not make a specific offer on IRAs, although senators debated the issue.
Packwood's conferees agreed to the revenue-raisers with considerable trepidation.
"I choked and gulped and gasped and gagged and swallowed it, and I was left blue in the face and rolling on the floor," Sen. John C. Danforth (R-Mo.) said.
Sen. Malcolm Wallop (R-Wyo.) said House conferees seemed to forget that lower tax rates for individuals meant little if business taxes were raised so high that jobs were lost. "We believe the greatest middle-class tax advantage is a job," Wallop said.
Despite their anxiety, Senate negotiators were able to protect many of their pet interests. The proposal included no cutbacks in a tax benefit for defense contractors favored by Danforth, nor did it limit current favorable tax treatment for oil and gas production.
Packwood, however, gave up a considerable home-state tax benefit when he agreed to end low tax rates on capital gains for corporations, an important break for the timber industry.
Packwood's proposal would raise $6.8 billion from 1986 to 1991 through changes in depreciation, the system by which companies write off the loss in value of aging assets. For example, sources said, automobiles would be written off over a period of five years rather than three.
Large banks would lose a method of accounting for loan losses that they have lobbied hard to retain, and farmers would lose income averaging. They had been granted a special exception from repeal of income averaging in the Senate bill.
Other items on Packwood's list were accepted earlier by the House. They include extending the tax credit for research for three years rather than four, ending the tax-free status of employer-paid education and group legal assistance for employes and reducing the deduction that self-employed persons take for their health-insurance premiums from 50 to 25 percent of the cost.