Evening star., 1938-12-25

~ INV NVuSsVSS
Spending Bills Due to
Get Precedence
In Early Days
By the Associated Press.
The possibilities Of special arma-
ment taxes. higher levies on the
little fellow" and sitter penalties
for dividend withholding corpora
tions forecast lively tax debates in
the approaching session of Congress.
The tax fight, if it occurs, won't
get very bloody until spring, how
ever, because spending measures will
furnish more urgent and attractive
topics in the early days of the ses-
sion.
To date, according to Secretary Of
the Treasury Morgenthau, the ad-
ministration has no tax program for
this session. The Secretary has
limited vaguely there may not be
one of major proportions. But that
is really up to President Roosevelt.
who has avoided any recent discus
sion of the problem.
Congress and the President both
will face the tax issue from two
angles: First, increasing Federal
revenue to balance the budget, or at
least to reduce the deficit; second
(but almost equally prominently, ad-
justing taxes so as to ease the pain
OF payment in some cases, to accom-
plish regulatory purposes in other
instances, and to promote equally Of
treatment within the ability to pay"
theory.
Eccles Opposes Boost.
Recent utterances of such White
House advisers as Chairman Mar
riner s. Eccles of the Federal Re-
serve Board indicate slight admins
tration sentiment for boosting tax
rates for budget purposes. Mr.
Eccles, one of the leading spend-for-
recovery theorists, has argued that
the budget can be balanced only by
stimulating business so that national
income rises to the point where
present tax rates will produce
enough revenue to equal expendi-
lures.
In the Treasury and some con-
gressional circles, the Eccles theory
may not be accepted at full value
despite the zeal with which the
missionary -turned-banker breaches
his fiscal gospel. At the Treasury,
however, cautious Secretary Nor
genthau and Undersecretary John
w. Hanes, a recent recruit from
Wall Street brokerage house, prob
ably also will oppose any major
tax increases on the grounds they
might stif1e business recovery.
Republicans and some Democrats
suggest cutting expenditures as the
proper way to balance the budget.
In Congress. the dividing line is
more likely to be drawn on tax
methods than on tax rates. Sen
ator Harrison of Mississippi, tri-
umphant in last sessions tax re-
volt, already has served notice he
wants no tinkering this year with
the undistributed profits tax. Sen
ator Harrison and his allies trimmed
the profits tax to a shadow of its
1896 stature over President Roose-
velt's protests. and eventually they
will seek its outright abolition.
Toy With La Toilette Plan.
In their dreams of some day bal
ancing a Federal budget which has
dripped red ink for nine straight
years, Treasury experts sometimes
have toyed with the pet scheme of
Senator La Toilette, Wisconsin
Progressive, to broaden the income
tax base" by lowering personal ex-
emptions and increasing rates on
low or medium income classes-in
other words, to make the little
fellow" carry bigger share of the
Federal burden.
Some of the experts say privately
that the La Toilette proposal is
fair and desirable, but they don't
believe the politicians will accept
it. They put it bluntly, like this:
There are more voting little fellows
than big fellows and, considering
we've got presidential election
coming on in 1910, it would be polit-
ical suicide to load more taxes on
the people who have got the votes.
Bernard Baruch, the suave per-
sonal friend Of the President who
managed the World War Industries
Board, started the talk about arma-
ment taxes. He told officials he
believed America needed stronger
arms, that the arms would costs
much money, but that they should
be paid for through increased taxes.
Mr.. Roosevelt subsequently agreed
that defense should be on a pay
as-you-go basis, but hedged his
statement to hide any intent, if
he has one, to seek extra or special
defense taxes.
The only urgent tax problem this
session. will concern the series of
manufacturers excise taxes on auto
radios, cosmetics, refriger-
ators and similar products which
expire in July, 1899. These prob
ably will be re-enacted without much
change. Secretary Morgenthau
wants to get rid of these levies in
principle. but the fact is the Treas
ury needs the money too badly.