Evening star., 1938-03-17
BY JOHN C. HENRY.

ny JOhN u. HENRY.
Sharp reduction Of the higher sur
tax rates on individual incomes was
seen as q probable recommendation of
the Senate Finance Committee today
as its members collected estimates
both from the Treasury Department
and the technical staff of the Joint
Committee on Taxation concerning the
effect such changes would have on
Federal revenue.
After two-hour closed session with
Undersecretary Of the Treasury Ros-
we'll Magill, Finance Committee Chair
man Harrison told reporters the high
est estimate of loss submitted in event
the top surtax rate Is reduced from
IS to so per cent, was $4,000, ,0O0.' :
This figure. submitted by DR.. Magill,
did not take into account the possible
stimulation of new investment capital
becoming available as q result Of a
lower tax rate.
Although no exact figure was
named, Senator Harrison said L. H.
Parker. chief Of the Joint Committee,
had estimated an even lower loss as a
result Of the proposed rate reduction.
Other Scaling Down.
Although the figures cited deal en-
tirely with possible reduction Of the
top bracket Of rates only, Senator
Harrison pointed out that naturally.
there would have to be some scaling
down in other brackets"
Congress must consider the ques-
tion of whether a person finding his
potential income falling under q re-
duced surtax schedule might be en-
couraged to invest more money in
productive enterprise" the chairman
said.
II have said before that think it
would be q good thing to lower some
Of these highest brackets. We never
have received as much money from
them as lot of people think
The top surtax bracket now applies
to net incomes above 5000 900, but
surtaxes begin on net incomes in excess
Of $4,000 and mount rapidly, on .
graduated scale.
To Be Submitted Monday.
Chairman Harrison announced that
complete Treasury estimates on alter
ed provisions Of the tax bill as now
contemplated by his committee would
be submitted in open session next
Monday. The Treasury has made
known its disfavor for the Senate
committee sentiment in favor of out
right elimination Of the graduated
undistributed corporate profits taxes
and drastic revision Of the capital
gains levy.
Open hearings on the bill were to
begin before the Senate committee
this afternoon.
In the bill. az sent to the Senate
from the House, the undistributed
profits tax was modified to exempt
corporations with net income under
$4,000, while the treatment of capital
losses was modified and the rates on
capital gains revised. All these changes
were made with the approval Of the
Treasury Department.
Rumblings In Senate.
On the Senate side Of the Capitol.
however, there has been evinced de-
termination to make drastic modifca-
tions in the two levies so bitterly crit
icized by business interests during the
past two years. A majority Of the
Finance Committee has indicated In
formally that it will favor substitution
of fat corporate income tax rate for
the undistributed profits levy and
fiat separate tax for capital gains,
rather than making them subject to
income tax schedules.
As the Senate committee prepared
to launch its open hearings, there was
laid before it today a protest from
Repeal Associates. an organization in
terested in the liquor control prob
lem, against the increased tax on
distilled spirits inserted in the measure
in the House.
The increase, the committee was in
formed by Capt. w. H. Stayton, head
Of the organization, would inevitably
add to the problems Of proper liquor
control by the States, fof it would in
crease the activities of bootleggers.
necessitate an incrase in enforcement
agents and in the cost Of enforcement" I"
First witness scheduled to appear
at the open hearings this afternoon is
r. v. Fletcher, Washington repre-
sentative Of the Association of Amer
ican Railroads. Vexed by falling rev.
enues, the railroads are vitally con.
cerned with any changes in tax obli-
cations.