Evening star., 1932-05-09
SENTIMENT SWINGS.
BACK TO SALES TAX
House Acceptance Forecast
if Senate Can Reach
Agreement.
BY DAVID LAWRENCE.

A bipartisan drive in the Senate for
a modified sales tax to net at least
$500 600 900 in revenue and make un-
necessary some of the taxes already
adopted by the House has been begun.
Senator David Walsh of Massachu-
sets, Democrat, is leading the fight,
which will be aided on the Republican
side by Senators Reed Of Pennsylvania
and Smoot of Utah.
The plan is to recommend l per
cent sales tax with exemptions on GER
tain necessities Of life as an amendment
to the general tax bill reported today
by the Senate Finance Committee. The
belief is that if the Senate can reach
an agreement, the House will accept the
plan after the usual conference pro-
cedure.
Many members Of the House who
voted against the manufacturers tax
insist that If the rates had been lower,
they might have approved it. Also
members who have received bitter pro-
tests against the substitute taxes know
that as between the House bill and the
manufacturers tax they would be justi-
fed in assuming that many Of their
constituents would prefer the sales tax.
Income Tax Revision Held Need.
Undoubtedly a revision Of the present
income tax laws will also be necessary,
but the cry that this is no time to put
a specific burden on industry Is being
raised just as the experts are beginning
to doubt whether it would bring in the
revenue needed to balance the budget
anyhow.
The taxes thus far adopted by the
House and recommended by the Senate
EHv1Q Tnyra fnn orr NV
business men as a tax on incentive and
not likely to cause capital to flow into
investment channels, enabling busi-
nesses to begin re-employing labor on
an extensive scale
The tax plan that Is finally accepted
by Congress must also be satisfactory to
President Hoover, who Is taking an ac-
tive part in the negotiation Of a COM
promise program. Politics has been
largely eliminated, as all sides recog-
nize that the country is waiting for an
exhibition of speed as well as non
partisanship in framing revenue meas
ures, the burden Of which must be
borne by Democrats and Republicans
alike. The economy program has struck
snags, but when once tax plan Is In
sight there Is every reason to believe
there will be a crystahZation of senti-
ment on reduction Of expenditures.
Closely Related to U. s. Credit.
The proposed tax plan is closely re-
lated to Government credit in the
sense that even if the budget is not
balanced exactly in the next fiscal
year, the specialists in Government
securities will tend to regard the sales
tax, for example, as such an excellent
revenue producer that they will con-
c1Aar Cx0uory1rnaF1t hnT1dc
Gates a much better purchase than
they have been in the last few weeks
Of uncertainty and doubt over the
possibility that the taxes under con-
sideration would ever balance the
budget.
When business begins to recover, the
receipts from the sales tax may mount
high enough to enable the Government
to pile up sufficient surpluses to erase
the three to four billions which it has
been figured would be the net increase
in public debt arising out of the de-
preston.
| Another phase of the matter which
Is attracting attention Is the possible
enect OF a new tax plan on increased
expenditures for public works and con-
struction. While at the moment the
| administration is opposed to Juch
spending, there is considerable Benti-
ment for it among the Progre4~lves in
Congress as means of saving munich
palties that are rapidly exhausting
their relief funds and are unable to
| collect enough money on real estate and
| other taxes to strengthen their credit
for borrowing purposes.
Once a good revenue producing plan
| is adopted, emergency relief measures
will not be as readily opposed on the
| 49,
may find supporters among groups
hitherto fighting it, but it Is evident
| there will also have to be concessions
to those who believe food and other
necessary articles in the poor mans
budget should not be subject to the
sales tax.