Reagan’s Tax Proposals

Staff writer Tom Redburn indicated (June 2) that “most taxpayers would gain from the tax reform proposal that President Reagan submitted to Congress, even in relatively high-tax states such as California, where the loss of the deduction for state and local tax payments is expected to hit particularly hard.”

Despite Redburn’s thoughtful analysis of the President’s proposal, some points may need further amplification. For instance, although considerble numbers of Californians would benefit slightly if state and local taxes were no longer deductible, those most likely to be adversely affected are families characterized by two wage earners and fewer children. In other words, under the guise of being “pro-family” the President is proposing to try and reverse the entire trend in this country since World War II of more and more marriages where both spouses work, and of smaller numbers of children per family.

While some may support this proposed transfer of wealth to those families more typical of 1945 than 1985, it is definitely far more of a decision in social policy than a simple effort at tax equity or simplification.

We should also keep in mind that taxes are the means, however imperfect, by which we meet community needs for schools, roads, museums, support for the afflicted, and all the other decencies of civilization.

According to an executive for H&R; Block tax preparation service, the strongest negative impact of the President’s plan would be felt by “people who own homes and earn between $30,000 and $70,000” per year because of the disallowing of property tax deductions. Neither the small decreases for a majority of taxpayers, nor the substantial benefits for persons earning over $200,000 a year can justify the increased burden on the middle-income taxpayers who itemize their tax returns. The middle-class, two-wage earner family with a couple of children is not just another special interest group to be bartered away.

In relatively high-tax states such as New York, Massachusetts, or California, taxpayers have been able to deduct state and local taxes from their federal tax returns, but without that factor, there will be considerable pressure for tax cuts in these states with a corresponding loss of government services.

Adoption of the President’s proposal would result in double taxation--a tax on taxes already paid to state and local governments. No one is likely to appreciate a higher tax rate and it is only reasonable to expect a resulting demand for reductions in state and local services if Reagan’s proposal is adopted without significant change.

I support real tax reform and I favor simplification of the tax codes, but we need to review President Reagan’s proposal from every angle before falling blindly into line behind something that may be more “revolutionary” than any of us currently understand.

DAVID ROBERTI

President Pro Tempore

California Senate

Sacramento