FOR an Administration that prides itself on careful deliberation, last week's tax proposals were put together with rather uncomfortable haste. Presenting the Nixon program to the tax-writing House Ways and Means Committee, Treasury Under Secretary Charls E. Walker sounded almost apologetic when Chairman Wilbur Mills complained that the plan touched only a few tax inequities. "We have tried to meet some of these things head-on," Walker conceded. "But after all, we have had less than 100 days."
Despite its 19-item brevity, the Nixon package calls for changes of considerable social—and perhaps political —consequence. It revives the nation's dormant movement toward greater income equality by proposing to tax rich tax avoiders more and to excuse the very poor, students and summer-job holders from paying any federal income taxes at all. In two surprise proposals, the President asked that the 1968 income tax surcharge be cut from 10% to 5% next January and that the 7% tax credit now allowed businessmen who invest in new productive capacity be repealed. That amounts to a sophisticated redistribution of tax burdens, with business losing and consumers gaining. Recognizing that taxation is a powerful instrument for setting and reaching national goals, the President pledged that the next step would be a "start" on two "high priority programs": tax credits to encourage investment in the turbulent ghettos and the sharing of federal revenues with hard-pressed state and local governments.
Reshuffling the Burden. The "most critical problem," said Assistant Treasury Secretary (for tax policy) Edwin Cohen at the House hearings, is to maintain "confidence in the tax structure." Nixon's program seeks to do that by reshuffling some $4 billion in tax liabilities without much altering the $165 billion federal income-tax take. Thus the impact on the inflation-ridden U.S. economy is likely to be small. The main thrust, as Nixon described it, is to "lighten the burden on those who pay too much, and increase the taxes of those who pay too little." He added: "We shall never make taxation popular, but we can make taxation fair."
Beyond the extra $1.8 billion a year in spendable income that Americans stand to retain if the surtax is reduced, only a few of Nixon's reforms would benefit the middle-income taxpayer. To help the poor, the Administration proposes a "lowincome allowance." It would reduce the taxes now paid by the 5,300,000 Americans (of a total of 26 million) whose annual incomes are near the official poverty line ($3,535 for a family of four). Some 2,000,000 families would be excused from taxes altogether. Above the poverty line, low-income persons and families would pay taxes at reduced rates. A family of four would begin paying taxes only at the $3,500-a-year income level, instead of at $3,000 under the present law; even then, it would not pay the full tax rate until its income reached $4,500 a year. By Treasury estimate, such relief would save low-income taxpayers about $700 million a year.