Tuition-Tax Panel 'Signals' Reagan Interests, Says Official

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Despite concerns expressed by officials of the Reagan Administration about the economic and constitutional feasibility of tuition tax credits, the Administration plans to continue to support the idea.

An Administration official last week made known the existence of a panel to "develop options for moving a tuition tax-credit proposal forward," possibly for use in a tax package the President might send to Congress this fall.

John E. Chapoton, assistant secretary for tax policy in the Treasury Department, described the panel in testimony before the House Subcommittee on Elementary, Secondary, and Vocational Education. It was the first public acknowledgement that such a group has been created, a White House source confirmed.

Administration's 'Signal'

The panel, created by the Cabinet Council on Human Resources, brings together staff members from the Justice, Treasury, and Education departments, the Office of Management and Budget, and the White House Office of Policy Development.

Shannon Fairbanks, senior policy adviser to the council, declined to give further details on the group's personnel or its agenda, saying only, "This is meant to signal that the Administration has decided to move forward with action on the matter."

Mr. Chapoton, speaking before a House subcommittee that heard familiar arguments from witnesses representing groups for and against tuition tax credits, stated that the Administration is still in favor of tax credits, its current problems with e federal budget notwithstanding.

His testimony, Mr. Chapoton said, was essentially a rereading of that given before the Senate Subcommittee on Taxation and Debt Management in June. "I stated last June that the revenue cost to the Treasury of Senate Bill 550 [known as the Moynihan-Packwood bill] would be approximately $2.7 billion in fiscal year 1983, rising to nearly $7 billion in fiscal 1986. In a time of severe pressure on the federal budget, these are clearly significant amounts."

Nevertheless, Mr. Chapoton said, "This Administration is determined to work as closely as possible with Congress in constructing a tuition tax-credit bill...."

But in an interview with the Associated Press earlier this month, Deputy Treasury Secretary R.T. (Tim) McNamar expressed concern that aid to private schools, 85 percent of which are church-operated, would ultimately be judged a violation of the constitutionally required separation of church and state.

Opponents of tax credits have been making this argument for years, but Mr. McNamar's comment was the first in that vein by an official of the new Administration.

"There are a number of Justice Department officials who privately have indicated to me that they just don't think it will fly," Mr. McNamar said in the interview. "It seems to me we have to take a look at that before we go forward."

The bill currently being considered, introduced by Senators Daniel Patrick Moynihan, Democrat of New York, and Robert Packwood, Republican of Oregon, would limit the credit to $250 per family in the first year and $500 in the second.

Vol. 01, Issue 04

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