Evening star., 1933-06-04
The Harrison Tax Program.

=
Senator Pat Harrison of Mississippi,
chairman Of the Finance Committee,
has produced a new tax program to
meet the S220,010,000 annual cost OF
financing the administration $780,
100000 public works program. In his
measure, which differs vitally from the
tax program contained in the House
public works and industries bill, Mr..
Harrison has abandoned the sharp in
creases in the normal income tax rates
and has substituted tax on capital
stock. He has proposed also that the
House tax on stock dividends, making
them for the first time subject to the
normal income tax, be revised and that
the tax be collected at the source. The
added tax on gasoline carried in the
House bill is three-fourths of one cent
per gallon. This Senator Harrison pro-
poses to reduce to one-half of one cent
The chairman of the Finance Com
mittee has gone further in his proposed
changes in the income tax law, frankly
attempting to prevent such writing off
Of partnership losses against individual
income taxes as made it possible for the
partners of J. P. Morgan & Co. to
pay no income taxes in 1881 and 1892
The administrative changes in the law
which Senator Harrison has recon-
mended to his committee would deny
to private bankers-the House of
Morgan is a private banking house
the right to write off security losses
against their income taxes, and further
would make it impossible for partners
in such concern to charge the partner
ships losses against their individual
income taxes
Undoubtedly the plan of Senator
Harrison to strike out of the public
works and industries bill the proposed
increases in normal income tax rates,
raising these rates from to per cent
on the first $4,000 of taxable income
and from to 10 per cent on the second
$4,000, will meet popular approval. These
high normal income tax rates fall with
great weight on the men and women
of moderate and small incomes. The
House adopted the income tax rate in
creases in its effort to avoid going to
a manufacturers sales tax, a tax which
House members apparently consider
politically ineXpedient, Notwithstanding
the fact that it would be amply pro-
ductive of the needed revenue and
would in reality be felt comparatively
little by the general public because of
the low rate proposed and because of
the wide spread of the tax.
Senator Harrison. too, has avoided
this controversial manufacturers sales
tax proposal in his new program of tax
legislation. Rather he has turned to the
so-called capital stock tax From this
tax upon the corporations of the coun-
try Senator Harrison estimates that it
would be possible to raise 1000 900
revenue. The rate of the tax during the
World War, when it was formerly ap-
piled, was one-tenth Of one per cent
on the par value of the stock
The proposed capital stock tax would
inf1ict an additional burden upon busi-
ness. Senator Harrison has described
1t as a tax on the privilege of doing
business. The low rate, he contends,
makes not heavy burden, and further
he insists that as the industry recovery
bill is designed to aid industry and
business, industry and business should
bear more of the share of the cost.
This proposed tax, estimated to yield
$50 100000, would bear heavily on
corporations, most of which are now
operating at a loss or at greatly re-
duced profits. The transfer of the
additional dividend tax from normal
taxes, as proposed by the House. to a
tax to be collected from the corpora
tions simply serves to conceal from the
lower brackets of income taxpayers that
they are paying taxes on such incomes
as they receive in dividends, not only
the 1884 per cent now paid, but an
additional tax estimated to yield
$40 100000
The Senate Committee and the Senate
itself still have an opportunity to turn,
If they desire, to a low-rate manufac-
turers' sales tax to raise the needed
revenue to finance the public works and
industries bill.