Evening star. [volume] (Washington, D.C.) 1854-1972, 1938-08-21
ESTATE-G|FT TAX
:: ]. MERGER STUDIED
re
New Plan Would Consolidate
=. Charges and Raise More
Positive Barrier.
BACKGROUND

80 POSITIVE barrier.
BACKGROUND
Increasing Government erpendi-
lures, as shrinking revenues reflect
depressed business, haze led to gen.
eral belief that major tar reDisions
pill be problem, of the merit Con-
cress. During present recess Treas
nry experts and those OF congress
stonal standing committee haze
been reuieving field OF potential
repenue.
BY the Associated Press.
- The Treasury is studying q pro-
posal to consolidate the Federal gift
and estate taxes and thus raise more
positive barrier to avoidance of the
higher tax brackets.
Under the proposal to combine the
gift tax and the two Federal estate
taxes into single transfer tax" all
gifts, whether made during the donors
lifetime or passed on as estates, would
be taxed the same.
Successive gifts, whether effective
before death or afterward. would be
Jumped together to determine the tax
bracket applicable to them, and thus
they would come under a higher
bracket than if they were taxed sep
arately. part as gifts and part as
estates.
=. The system of taxing a series of
.eifts the same as a lump gift on the
same aggregate amount already is i'm
posed by the gift tax. and the Govern
xment attempts by litigation to pre-
.yent reduction Of estates for tax pur-
poses by gifts made in anticipation
of DEATH
>. See End to Litigation.
Officials envision elimination of this
litigation as one result that might be
expected from adoption Of single
"transfer tax" Another they are TAX
ing into account is the elimination Of
duplicate forms and procedure.
= The proposal is sharing Treasury
attention with the previously publ
cized proposals for another revision
of the undistributed profits and capital
sEains taxes, for extension Of expiring
excise taxes and for reduction of per-
ssonal income tax exemptions.
= However all of the Treasury's tax
work for the next Congress is still
in the study stage, authorities said
Yesterday. Although Assistant Secre-
atary Magill discussed progress with
the President week ago, he said no
policy decisions would be made until
Secretary Morgenthau returned from
France and consulted President Roose-
welt. Mr.. Morgenthau is due back
tomorrow
= The chief obstacle to simplification
sof estate taxes, experts said, was the
srevamping of the present system Of
giving credits for inheritance taxes
paid the States. Under the 1925 Fed
-eral estate tax, these credits range
from nothing to 80 per cent of the
Federal tax, but no credit is given on
sthe additional estate tax imposed in
1882. Offlcials would prefer fiat
percentage credit near the average of
is per cent, but admitted this would
be opposed by States having numerous
large estates.
i Present Exemptions.
At present, each taxpayer has life
time Federal exemption of $4,000 on
his gifts, and similar SAC, 900 exemp-
ton on his estate. One of these ex-
:emptions probably would be eliminated
I'm the proposed consolidation. The
gift tax now has an additional ex-
,emption Of $4,000 per year per person,
which has been reduced to $4,000 be-
ginning next year.
AS to the proposal for reducing per-
ssonal income tax exemptions-from
$1,000 to $500 for single persons and
from $4,000 to $4,000 for heads of
sfamilies-Senator Harrison, Democrat.
.of Mississippi. chairman of the Senate
Finance Committee, recently joined
Treasury officials in limiting this was
lone of the revenue sources which
might be tapped in an effort to bring
THE Federal budget back into balance
He said Congress might be forced to
take such a step unless business i'm
'proved.
The Treasury has had eight con-
.eSsdelNe ucllSieS dilu chptCLS W IldVS
another amounting to $4,000, 600, 900
this year. For this reason, officials
take it for granted Congress will re-
enact most or all OF the present excise
taxes on gasoline, automobiles, radio,
refrigerators and other items before
they expire next June 80.
Undistributed Profits.
Much sparring is still going on be-
hind the scenes over the undistributed
profits and capital gains levies Presi-
dent Roosevelt made plain his dis
satisfaction with the moderation of
these taxes, decreed by Congress in the
1898 tax law, when he refused to sign
the measure. He permitted the act to
60 into effect without his signature
only, he said, to save other features
Of the bill.
An indication that the new admin
istration proposals will not be as severe
as those provided in the 1886 law was
given, some officials said, when John
W. Hanes, former Wall Street broker
and Federal Securities Commissioner,
was made Assistant Secretary of the
Treasury in charge of taxes. Mr..
Hanes has declined to make public his
views, to date, but in authoritative
quarters he is regarded as an enemy
Of any tax changes which would seri-
n,,e1u oHonH h,,ciYoocc