FROM WASHINGTON STRAIGHT

Washington’s post-election somnolence has been pierced by the Teheran hostage atrocity, the Shultz-Weinberger controversy, and David Stockman’s budget slashings ($34 billion on the domestic side). Dwarfing all else on the Washington scene, however, in both interest and political contentiousness, is Donald Regan’s revolutionary tax-reform plan. The battle is expected to be fierce, with lots of political capital riding on it.

Four out of five Americans believe that the present tax system is unfair, as IRS Commissioner Roscoe Egger stresses, and tax cheating is very prevalent. Regan’s reform seeks to simplify the mind-boggling tricky-track of the tax code. The code’s existing 14 income-tax brackets are cut to three (15 per cent, 25 per cent, and 35 per cent), personal deductions doubled (to $2,000), mortgage-interest payments on second homes and state and local taxes rendered nondeductible. Business is squawking loudest: The Accelerated Cost Recovery System (ACRS)—which both Reagan and Regan fought so hard for in 1981—and the investment tax credit are drastically revamped, and not in business’s favor. However, says Secretary Regan, instead of shooting from the hip at the reform, the business community should do its computer scans and runouts on the numbers and see what comes up. These results will go a long way toward allaying fears, he believes. And Secretary Regan stresses that the plan cuts the corporate tax rate from 46 per cent to 33 per cent, and that ought to count for something.

JM

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John McLaughlin

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Washington’s post-election somnolence has been pierced by the Teheran hostage atrocity, the Shultz-Weinberger controversy, and David Stockman’s budget slashings ($34 billion on the domestic side). Dwarfing all else on the Washington scene, however, in both interest and political contentiousness, is Donald Regan’s revolutionary tax-reform plan. The battle is expected to be fierce, with lots of political capital riding on it.

Four out of five Americans believe that the present tax system is unfair, as IRS Commissioner Roscoe Egger stresses, and tax cheating is very prevalent. Regan’s reform seeks to simplify the mind-boggling tricky-track of the tax code. The code’s existing 14 income-tax brackets are cut to three (15 per cent, 25 per cent, and 35 per cent), personal deductions doubled (to $2,000), mortgage-interest payments on second homes and state and local taxes rendered nondeductible. Business is squawking loudest: The Accelerated Cost Recovery System (ACRS)—which both Reagan and Regan fought so hard for in 1981—and the investment tax credit are drastically revamped, and not in business’s favor. However, says Secretary Regan, instead of shooting from the hip at the reform, the business community should do its computer scans and runouts on the numbers and see what comes up. These results will go a long way toward allaying fears, he believes. And Secretary Regan stresses that the plan cuts the corporate tax rate from 46 per cent to 33 per cent, and that ought to count for something.