Evening star., 1936-02-20
BITTER TAX FIGHT
FACING CONGRESS
Income Levy Revision Urged
by Liberals to Meet In.
creased Relief.
BACKGROUND

ofing, administration mas moDeG
slowly on tar question, but must
raise some 5000 100000 to meet
A.A. A. invaliddtion costs and bonus
payments this year. Tdr program
Dtu be last major business item on
congressional calendar after farm
bill Is passed Clash expected be-
ttDeen Senate proponents of higher
income tareS and proposal to reDtpe
leuies similar to outlaUed process
ing tdIeS.
copyright. 1885. by Associated PressJ
A hammer -and-tongs fight over
taxes and Government spending was
in the making in Congress today de-
spite the strenuous efforts of cam
paign-conscious leaders to keep the
session fairly tranquil and end it
quickly.
These two developments threatened
the congressional peace:
!. Sharp increases in the number of
persons on work relief were reported
by w. P. A., which set the current
figure at 3,797,770 This is nearly 300,-
600 more than the 3,500,0O0 goal orig
inally set for the $4,000, 100000 relief
drive. Powerful liberal Senators,
fighting any deep slasheS in next years
relief funds, are expected to seize upon
the new figures to back their argu-
ment that huge expenditures must con-
tinue.
2. Senate liberals disclosed they
would demand broader and higher
income tax structure. Among them
is Senator La Toilette, Progressive, of
wisconsin, who wants to boost income
levies on the wealthy and tax several
million smaller incomes now exempt.
This development foreshadowed hot
battle against any administration pro-
posal to finance the new $440,000,0 600
farm program from taxes similar to the
old A. A. A. processing levies invali-
dated by the Supreme Court
Storm May Be Terrific.
Taxes and relief were considered the
only remaining major legislation likely
to raise storm in Congress-but some
legislators figured that storm might be
terrific.
Moving carefully. President Roose-
velt has not announced a recommen-
dation on either problem. Uncertainty
still surrounded the administration
tax program after an inconclusive
White House conference yesterday.
Tax experts of the Treasury and
Agriculture Departments have drafted
tentative suggestions for 100000, 600
In levies to finance the farm program
and some Of the bonus cost, but the
White House has not yet passed on
the proposals. so far as is known. The
suggestions include levies on process
sors and some revisions in income tax
exemptions.
Senator La Follettes bill, however,
would be more sweeping. He said he
would offer. if the administration did
not, an income tax schedule similar
to one he proposed last year.
Besides raising taxes on the rich,
1t would lower the exemption for mar
ried couples from s2,500 to $4,000 and
for single individuals from $1,000 to
$500.
Would Boost Tax Rate.
1t would also jump the normal tax
rate from to 6 per cent and start
the surtax on incomes of $4,000.
Last year the La Toilette plan was
estimated to yield about s250.0O0,OOO,
but its friends believe that with the
improvement in business since then
the revenue would be much larger
Others in the independent group.
both Republicans and Democrats,
would ready to join La Toilette in
opposing processing taxes, or similar
1evies. They contended these were
really sales taxes which drew more
revenue from the poor than the rich
On the other hand, many members
of Congress contended that little ad-
ditional revenue would be raised by
increasing taxes on the rich, and that
any substantial new Government in
come must come from the rank and
file
One congressional tax authority fig
ured out a theoretical case to show
that under present income and estate
tax rates the accumulation of huge
fortunes is no longer possible, and
even those already in existence even
tually will be broken up.
s100,o00,0oo to s17,o0O,0o0
He took as an example a man with
o $100,O00,000 fortune. When that
man dies, he said. his tax will be
e67, 1862 900, leaving an estate of
$32 1851, 400 to be passed on.
If it all goes to single son. who
earns an average of 10 per cent a
year, his annual income will be So
263,740. Out of that he will have to
pay an income tax of S2,434,711. This
will leave him s829,O29 a year.
Assuming that he lives on $4,000 a
year, which the tax authority held
would be unlikely, he would add s15.-
100000 to his fortune in Is years.
He would then die with 5000 900.
The tax would be s31 ,O00,o 900 and the
one-time fortune of 100000, 900
would be down to $l7,000,0OO.