Tax Reform

By a 292-136 vote, the House passed and sent to the Senate a historic bill (HR 3838) that radically changes the U.S. tax code. America's new tax system would take full effect in 1988, lowering the top individual tax rate to 28% and the top corporate rate to 34%. The great majority of individuals would owe less in taxes and the typical corporation more, because the bill eliminates a host of breaks that have benefited businesses and wealthy individuals.

A lot of politicians tell me that nobody cares about tax reform. Apparently a majority of the House Ways and Means Committee believes that this is true. If they thought that voters really cared about progress toward a tax system that won't need more "reform" in a couple of years, they wouldn't have had the nerve to put forward the bill completed in the wee hours of the morning of Saturday, Nov. 23. The Ways and Means proposal is tax revision, not reform.

Beverly Sills, the diva who gave up her singing career to assume leadership of the New York City Opera, denounced federal income tax reform Thursday, saying its enactment "will be the greatest single catastrophe of our times" for the arts. Sills and actor-director John Houseman told 500 grant makers from foundations and corporations that it is time to throw in the towel in the fight for more federal aid to the performing arts.

Stifle those second thoughts about tax reform. Now that its passage seems inevitable, the doubters are getting one last say. They would have you believe that America is about to wake up with a head-splitting hangover and the horrifying discovery that during the previous night's festivities it got married to a gorilla. In econometric laboratories across the nation huge computer models churn out ludicrously precise prognoses (growth down 0.3%, predicts Wharton Econometrics).

QUESTION: I recently got a promotion and I had to buy a car for my new job. Some of my new co-workers say they think I qualify for a tax writeoff on at least part of the purchase price and on some of the monthly expenses. But others say the tax breaks ended with tax reform. I've never taken tax writeoffs before, so this is all new to me. Can you help me sort this out?--H. D. ANSWER: Tax reform diluted the value of auto writeoffs, but it didn't eliminate them entirely.

Jack Faris, head of the National Federation of Independent Business, wants to junk the nation's tax code, all 7 million confusing words of it, and start over. Toward that end, Faris chose highly symbolic Independence, Mo., from which to launch a petition drive in September. He seeks signatures from 1 million Americans for his effort to abolish the Internal Revenue Service tax code by Dec. 31, 2000. "If we don't lead the charge, who is going to lead it?"

President Reagan will be "leading the charge" for tax-reform legislation this year, Treasury Secretary James A. Baker III pledged Wednesday, although he repeatedly refused to tell a skeptical House committee what specific changes the Administration will seek. At the same time, in the first signs of business backing for tax reform, an influential group of business leaders joined a bipartisan drive for a simplified tax code with lower rates.

House Majority Leader Dick Armey (R-Texas) and Rep. W. J. "Billy" Tauzin (R-La.) will discuss income tax reform during a visit Friday to Buena Park. The Republican congressmen plan to debate the benefits and drawbacks of proposals for a flat tax and a national retail sales tax as alternatives to the existing system. They will meet at a gathering of the Citizens for a Sound Economy Foundation at the Buena Park Hotel and Convention Center.

House Speaker Newt Gingrich (R-Ga.) said Saturday that Republicans in Congress will consider replacing the federal income tax system with a national sales tax. House Ways and Means Committee Chairman Bill Archer (R-Tex.) is expected to hold hearings this summer on several Republican tax-reform plans, including one that calls for implementation of a flat tax, Gingrich said at a town hall meeting here.

City Councilwoman Wendy Greuel announced Thursday that she and Councilman Eric Garcetti will unveil a reform package for the city's business taxes next week. Greuel said the city's system of business taxes is outdated, overly complicated and onerous for businesses. The reforms are designed to simplify the system, she said. Officials hope the package can be voted on by the council before year's end.