Rostenkowski to Keep Taxes as Top Issue

WASHINGTON â€”  House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.), returning Sunday from a weekend retreat with committee members and top Treasury Department officials, vowed to keep taxes as his top priority, ahead of trade legislation, and said that delays in beginning to work on a bill would not prevent House action this fall on tax revision.

Participants said that no firm conclusions were reached at the discussions held at a secluded estate in Virginia, although many tax lobbyists had worried that the closed-door sessions would be devoted to settling some of the differences between panel members and the Reagan Administration.

‘Productive, Useful’

Treasury Secretary James A. Baker III said that the weekend retreat was “not a negotiating session� but called the discussions “very productive and useful.�

Baker said that it “should be no surprise� that the Administration is flexible on nearly all aspects of the White House tax proposal, but he refused to discuss where the White House was willing to compromise until after the panel begins writing a tax bill later this month. He told committee members that President Reagan would hold firm against any tax rate for individuals higher than 35%.

Baker, however, pointedly avoided committing the Administration to firm positions on other controversial issues, such as corporate tax rates, state and local tax deductions and the proposed near-doubling of the personal exemption to $2,000.

Committee members said that it still might be necessary to alter Reagan’s proposal on individual tax rates to provide greater benefits for middle-class taxpayers at the expense of business and the wealthy.

Rep. Don J. Pease (D-Ohio) said, “We are not bound by what the President wants on the 35% tax rate,� and Rep. Robert T. Matsui (D-Sacramento) said that the need to make other major changes in the White House package might mean that a higher tax rate would be imposed on high-income taxpayers.

Baker also reiterated Reagan’s insistence on preserving the home mortgage interest deduction, reducing the tax burden for the poor and ensuring that tax overhaul would continue to raise as much revenue as the current tax code--positions that are already widely shared by committee members.

Details of Reagan Plan

Under the Reagan plan, the tax burden for most individuals would be lowered by an average of 7%, with the personal exemption boosted from $1,040 to $2,000 and the current maximum tax rate of 50% dropped to 35%. Reagan also proposed to narrow several tax preferences and eliminate the state and local tax deduction and a tax preference for two-income families.

Baker, according to participants in the sessions, implied that the White House might go along with phasing in some aspects of the tax package over several years--including the lowering of individual tax rates--if that were the only way to keep the plan alive.

Rostenkowski, saying that he was “absolutely� committed to winning House approval of a tax bill this year, told participants at the retreat that any bill should foster overall economic growth and create a “level playing field� that would generally reduce special preferences for particular business interests.