Evening star., 1935-04-26
ESTATE TAX PLAN
TO PAY OFF BONUS
OFFERED IN SENATE
Morgenthau Proposes Sys.
tenn Designed to Raise
$500, 1000, 900 Yearly.
SLIDING SCALE ASKED,
WITH 60 PER CENT PEAK
Secretary Says Method Has Ad.
vantage Of Being Immediately
Feasible.
BY the Associated Press.

BY the Associated Press.
Chairman Harrison of the Senate
Finance Committee today made lub-
lie letter from Secretary Morecn-
thau proposing an inheritance tax
system which could be used to cash
the bonus. based on progressive rates
running up to so per cent.
Morgenthau estimated that such a
tax would yield about $500, 100000 in
1886 and might bring in as much as
600,000,000 annually thereafter. His
letter to Harrison follows:
In accordance with the commit
tees request during yesterdays hear
ing. am glad to outline below a
revenue measure which would provide
funds for the payment of the SOL
diers' bonus.
Held Most Feasible.
81. From the standpoint of i'm
mediate feasibility no less than that
of our fundamental objectives. the
best source of additional revenue at
this juncture would be a system of
taxes on the receipt of inheritances
and gifts.
Such system, supplementing our
present estate and gift taxes, would
fit in well with the rest of our Fed
eral tax structure; would add to its
balance and strength. and would not
materially interfere with the present
estate and gift taxes.
% The program that Is here sug-
gested would be relatively simple to
formulate and to administer: yet it
would be effective In brief. it is with
certain qualifications to subject all
inheritances and gifts to system of
rates similar to that of the Federal
income tax law.
IS. The result of this proposal
would be that gifts and inheritances
would be taxed at progressive rates.
and. under it, the Congress could
provide for the effective rates to vary
with the tax-paying capacity of the
recipients OF bequestS and gifts. On
very large bequests or gifts during
single year-one million dollars or
nore--if the existing income tax
rates are applied, the total tax would
approximate 60 per cent.
InStaiiments Proposed.
4. To prevent the necessity for
hasty liquidation of large properties
in order to pay the tax, it might be
provided that inheritance taxes be
payable in a convenient number of
installments
IS. The preliminary estimate Is
that such a tax would yield in 1886
approximately $500, 900. 900 and might
range upward to 100000 annually.
Our present estate tax is estimated
TO yield some sl90 100000 in 1886. 1t
may be observed that. from estate and
inheritance taxes. England, with
population of approximately one-third
that of the United States. and
smaller per capita wealth and income.
collected more than s400.000,000 in
death duties in the fiscal year ended
March 81, 1886"
G. o. p. for Vinson Bill.
Meanwhile the Harrison plan for
compromising the troublesome bonus
issue ran into threatened difficulties
today in the form of a Republican
drive for the Vinson bill to pay the
JULIUS III lulI lIIlIIleuldUS
Senate Republicans were lining up
almost unanimously for the Vinson
measure, which was defeated in the
House by a narrow margin. Senator
McNary, minority leader, issued q call
for q party conference tomorrow to
discuss the issue.
The stand of the Republican forces
threw a scare into the administration
leaders. who we're seeking to put
through the Harrison measure as
compromise which, its author says,
would be acceptable to President
Roosevelt.
Plans Could Be Upset.
A combination of Republicans and
Democrats pledged to support full cash
payment might easily upset the plans
of the administration leaders to save
President Roosevelt from the necessity
Of vetoing cash payment plan.
The compromise bill, which was
approved yesterday by the Senate
Finance Committee, was introduced
by Chairman Harrison of that COM
mittee after conference with the
Chief Executive. While the White
House has shied off from definite
commitments, President Roosevelt's
friends were sure he would sign the
bill If it is sent to him by Congress.
They have hoped it would solve the
question, for the present at least.
In the committee, the Republicans
voted almost solidly for the Vinson
plan rather than the Harrison bill.
Even those like Senators Couzens. Re-
publican. of Michigan, and Hastings,
Republican. of Delaware. who fatty
oppose cash payment, voted for the
Vinson measure in preference to the
compromise.
Under present plans Of admins
tration leaders, the bonus bill will be
called up in the Senate Monday. De-
spite the Finance Committees re-
lection of the ftill cash bonus plans,
they will be offered In the Senate. as
though they had never been voted
upon by the committee, as fresh sub
stitutes for the Harrison compromise.
Their submission will bring the issue
of cashing the adjusted service cer-
tificates to the supreme test. For
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