"Extraordinarily Difficult"

Treasury Secretary James Baker has been largely responsible for the final form of the Reagan Administration's tax package, and will keep watch on the measure's progress in Congress. In an animated and wide-ranging talk, Baker discussed tax reform last week as a guest at the quarterly meeting of the TIME Board of Economists. Excerpts:

On the bill's advantages. There should be a very substantial element of reform in this package. You are going to see a call for the elimination of many, many preferences and deductions, a move toward greater fairness and some move toward simplification. We are suggesting a system under which 60% of all taxpayers might not have to file returns but can simply receive, should they choose to do so, a statement from the IRS saying, "This is your tax liability." That would be significant simplification.

On the compromises made. It is more of a compromise than Treasury I (last year's Treasury plan) because it is our assessment that Treasury I had no chance for passage. We could not have got 20 votes in each house (of Congress), and all the good ideas in the world will never accomplish anything if you can't pass them into law.

On passage this year. It is going to be an extraordinarily difficult task, notwithstanding the fact that there is broad grass-roots support for the concept generally. There is extremely strong opposition with respect to the specifics. Number one, you are dealing with people's pocketbooks. Number two, you are talking about a very complicated overhaul of the tax system. And number three, you have distinctly different interests to meet in the House and Senate. (Nonetheless,) 1985, we have said, is our best shot.

On a minimum tax. Everybody thinks, and quite rightly so, that it's unfair for high-income individuals and for big corporations to zero out, and we are looking at the possibility of strengthening the current minimum provisions in a way that would make it, if not impossible, exceedingly difficult for that to continue to happen.

On presidential clout. I don't think the fact that the President is not running for office again means that he can't effectively mobilize support for something that should be inherently popular to begin with, unless you assume that any American President is a lame duck the day he gets re-elected. I don't buy that, so I think he will be able to mobilize. I think he will engender rather substantial support on the part of the public, and that, in the final analysis, is whom Congress listens to.

On past reform failures. I don't know how many of the past efforts were as comprehensive as this is, and I would doubt whether there has been as much presidential time, attention and assets devoted to them as I anticipate will be devoted to this. This, after all, was the centerpiece of the President's State of the Union address.

On bipartisanship. If tax reform is not bipartisan, you won't have tax reform.

On chances that the bill could be a revenue loser. The President has told us that it cannot lose revenue. He doesn't want it to gain revenue, but he doesn't want it to lose revenue. So we've been working very hard to make sure it is revenue neutral. If we end up (in Congress) with something that is unacceptable, I suppose the President would do whatever he thinks would keep it from becoming law.

On the need for reform. There is a genuine lack of respect out there for the tax system. That translates, in our opinion, to a genuine lack of respect for Government generally. And I think if we can cure the former, we have some chance of increasing respect for Government.