A Wealth of Tax Objections

The President defends his plan

It was an enthusiastic partisan crowd of 2,000 that gathered last week at a fund-raising banquet in Chicago for Republican Governor James R. Thompson, and the guest speaker took full advantage of the forum to lash out at Democratic critics of his tax-cut bill. "Our proposal is not a 'rich man's windfall,' as some have falsely charged," said President Ronald Reagan to applause. "It is fair, it is equitable, and it is compassionate."

The President's attack was designed to blunt mounting criticism from House Democrats that the Administration's tax proposals favor the wealthy. Reagan wants to reduce taxes 25% over three years for all income groups, which would return the most tax dollars to those who pay the most taxes. House Democratic leaders, who are pushing for a 15% tax cut over two years, would give only minimal reductions to individuals earning more than $50,000. "The President may be a real tightwad when it comes to programs that help working families," proclaimed House Speaker Thomas P. O'Neil to cheering union members in Boston. "But when it comes to giving tax breaks to the wealthy of this country, the President has a heart of gold."

The Democrats were encouraged by a Louis Harris poll published last week showing that the percentage of those who believed in the overall fairness of Reaganomics slipped from 56% in February to 33%. A poll taken last month by Democratic Pollster Peter Hart found that the public agrees, two to one, with the statement that Reagan's programs favor "the wealthy and big business over the average workingman." Claims Hart: "It's a beachhead that has been established."

From that beachhead, the Democrats are launching a wide-ranging counterattack to win both public and congressional support for their own tax plan. They are wooing two dozen moderate Northeastern Republicans considered "soft" in their support for the Administration's tax package, as well as 47 conservative Southern Democrats known as the "Boll Weevils," many of whom voted for Reagan's budget last month. A campaign-style "boiler room" has been set up so that members of Congress and their staffs can telephone constituents in 20 key Southern districts and urge them to persuade their lawmakers to vote the Democratic way. Says Democratic National Party Chairman Charles Manatt: "We're going after all those Boll Weevils just the same way Reagan did."

On the Hill both Democrats and Republicans are adding sweeteners to their bills to lure votes. "It's rather an unusual way of marking up tax bills," says Democratic Representative James Jones of Oklahoma. "But these are unusual times." Besides offering more tax deductions to small businesses, the Democrats are trying to improve on the Administration's $2,500 tax credit for independent oil producers and royalty owners; this could influence as many as 30 Southern Congress men. Says Democrat William Brodhead of Michigan: "It's like the arms race between the U.S. and the Soviet Union. For every move, there's a countermove; for every weapon, a counterweapon."

Beyond cloakroom maneuvering, the tax fight may hinge on public relations. Despite his personal popularity, Reagan's style of living may help foster the impression he favors the wealthy. A millionaire himself, Reagan has brought a moneyed way of life back to the White House. Even his pastime, horseback riding, carries with it in many parts of the country an impression of wealth and class. Regardless of the outcome on the tax bill, the Democrats may still succeed in tagging Reagan as a President for the rich --and damage his standing in future polls. "It is clear that the Democrats are trying to turn this into a class issue," says one White House aide. "The only thing that surprises me is that it took them so long." Adds a senior adviser: "We are worried that the President does not appear to be compassionate. But some of that image comes just from the nature of his budget cuts."

The White House lately has become somewhat sensitive about seeming too regal. When the First Lady left for California last month, aides decided that going to the airport by helicopter was ostentatious and instead ordered a modest motorcade. Aides are also keeping their distance from the Sequoia, the onetime presidential yacht sold by Jimmy Carter and now owned by a group of businessmen who are offering the Reagan team boat privileges. "People here have been turning down Sequoia invitations right and left," lamented one aide, who has received two calls to go cruising. "We don't even want to be seen on it."

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