For the Record rxf 6  
THE NEW TAX LAW is a striking signal of the sharp reversal in political purpose that made the 95th Congress extraordinary. It abandoned the orthodoxies that its predecessors had followed for nearly a generation. This dramatic change in attitudes reaches well beyond taxation, and it is being generated by a stagnation of the economy that has already run at least five years.</br></br>Successive Congresses had whittled away at the tax code for years, making it generally a little more progressive, shifting the burden slowly to the wealthier taxpayers. Throughout the 1960s, but particularly during the Nixon years, presidents and Congresses had joined in a massive expansion of social benefits to citizens, most notably in old-age pensions and medical care. The numbers of people living in poverty steadily declined. It was all financed out of economic growthÛÓwhich, during the long boom of the 1960s, was phenomenal. As long as the size of the pie kept increasing, it was never necessary to reduce the incomes of some in order to give more to others. The only question was over the distribution of the dividends of growth.</br></br>Hut that pattern of growth ended in the early 1970s. Last weekthe Labor Department published figures showing that earnings of wage and salary workers. corrected for inflation, have not increased over the past year and, in fact, remain lower than they were in 1973 before the recession. If the pie is no longer growing, then the political implications of the old policies change profoundly. In order to give more to some, it would become necessary actually to reduce the incomes of others.</br></br>In retrospect, it looks as though the curve of prosperity began to flatten out about a decade ago. But the country had other preoccupations: Vietnam, Watergate, a presidential election. It was only after-they passed that the country began to take account of what seemed to be happening.</br></br>tivityÛÓthe key to higher standards of livingÛÓstayed low. Business investment was below expectations, and an American loss of competitiveness was visible in world markets. The 95th Congress was forced to wonder if there wasnÛªt some substance to the rising complaints from business. That concern underlies not only the business tax cuts, but the failure of most of the labor movementÛªs bills over the past two years, and the new sensitivity to charges of over-regulation.