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Inequity forever.

Liberals have reacted to Treasury Secretary Donald Regan's tax proposals rather favorably, probably because they are genuinely amazed that this Administration contemplates taxing business more heavily and individuals more lightly. But closer inspection of this major revision of the Internal Revenue Code, aptly called by Jimmy Carter a disgrace to the human race, diminishes any hope of enlightenment in the White House.

To begin with, very little simplification will occur. Taxpayers who itemize--30 to 40 percent of the population--will still have to hire accountants. For owners of small businesses in particular, life will become more complicated because depreciation will be indexed to inflation and because seven categories of depreciable equipment and property will replace the current five.

Nor is the plan more equitable. It is strewn with booby traps for more vulnerable individual taxpayers. Unemployment compensation will be taxed like ordinary income, along with workers' compensation for industrial accidents and illnesses. The child-care credit will be changed to a deduction, with a substantial net loss for employed mothers. Workers fortunate enough to benefit from the more generous corporate health plans will find themselves paying taxes on part of employer contributions.

As Gov. Mario cuomo, Senator Daniel Patrick Moynihan and even The New York Times have complained, the Treasury is back to old Reagan tricks, an adroit assault on social programs. Middle-class families in high-tax states like New York and Massachusetts will pay much higher Federal taxes because they no longer will be able to subtract state and local levies. State income taxes will rise because most are based on adjusted gross income on Federal returns, which, with fewer deductions, will increase. The consequences will be demands for spending cuts and a furious political attack on the comparatively generous health, welfare and educational services funded by states and cities, which to some extent had alleviated the damage inflicted on social programs by the Reagan budget cutters.

Possibly the worst feature is the continued downward slide of upper-bracket persona income tax rates. During the Korean War, the top rate was 91 percent. As recently as 1980, a 70 percent rate applied to income from property. In 1981, the top rate declined to 50 percent. The treasury's new objective is 35 percent. Legislation passed in 1981 made the personal income tax substantially less progressive than it formerly was. The Treasury scheme freezes the 1981 distribution of tax burdens among rich, middle-class and blue-collar taxpayers.

Liberals, particularly in states like New York, should take Secretary Regan's proposals as a reaffirmation that any policy floated by this Administration is bad for the nation's health.

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Title Annotation:criticism of Donald Regan's tax plan
Author:Lekachman, Robert
Publication:The Nation
Article Type:editorial
Date:Dec 15, 1984
Previous Article:Politics of death.
Next Article:Minority report.

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