House Panel Votes Changes in ’86 Tax Reforms

WASHINGTON — The House Ways and Means Committee approved a bill Thursday correcting errors in the 1986 tax overhaul after tacking on several special-interest benefits and the tax increases to pay for them.

Pipe smokers, and moonlighters accustomed to writing off part of their phone bills, would pay more.

Recipients of special tax cuts would range from schools that benefit from scholarships granted in the name of Sharon Christa McAuliffe, the New Hampshire teacher who died in the Challenger space shuttle explosion, to fans who contribute to scholarships.

Committee staff estimated the bill would provide $7.1 billion in tax cuts over the next three years and raise an equal amount to finance them.

The bill, approved on a 33-3 vote behind closed doors, now goes to the House, but the presidential election campaign could prevent it from becoming law this year.

Some lawmakers have questioned whether Sen. Lloyd Bentsen of Texas, chairman of the Senate Finance Committee, who has been tapped to run for vice president on the Democratic ticket, will want to get involved with the bill later this summer. Also, Reagan Administration opposition to some of the money-raising parts of the bill dim chances of enactment.

Other Provisions

Some of the dozens of provisions in the bill would:

--Exempt free-lance writers, artists and photographers from a new requirement that they deduct expenses of an endeavor only after it starts producing income.

--Raise taxes on various corporations, including those that own parts of other corporations and defense contractors.

--Allow an 80% deduction for contributions to college athletic scholarship funds when such “gifts” guarantee a fan the privilege of buying a game ticket.

--Assure that fellowships created to honor the memory of McAuliffe are tax-free so long as the recipient teacher uses the money for academic improvement.

--Allow a surviving spouse to defer taxation on certain profits from the sale of a principal home, just as though the spouse had not died. Present law denies such a break if a spouse dies after a home is sold and before a new one is built.

--Prohibit any person with a home-based business (including moonlighters) from deducting any part of the base monthly telephone charge as a business expense.