Evening star., 1938-04-10
By JOHN c. HENRY.

Surviving a successful revolt by
proponents of an amendment to tax
income from future Federal securities
the Revenue Act of 1888, carrying
major notifications of the present tax
laws, was passed by the Senate late
yesterday.
No record vote was taken on the
bill as adoption came suddenly in the
wake of a surprising administration
defeat by a single vote margin on
the amendment of Senator Borah, Re-
publican, of Idaho to permit taxation
of income from future issues OF Fed
eral securities. The vote was "a to 33
Adopted previously in 1885 and
later thrown out in conference, the
Borah amendment of yesterday is gen.
orally expected to meet similar fate
in spite of frequent protestations of
approval of the theory of ending is
suance of tax-eXempt securities.
Party Lines Swept Aside.
Party lines were swept completely
aside as the amendment was approved
NGSbSIUdy dltSl uCoolC Aioo
sprung up unexpectedly While
harasSed majority leaders were at
tempting to gain passage of the bill
and recess the session. Twenty-fiv
Democrats combined with six Re-
publicans. one Farmer-Laborite, one
Progressive and one Independent to
make the "a votes while three Re-
publicans joined 80 Democrats in vot-
ing against the proposal.
Immediately afterward, Senator
Clark. Democrat, of Missouri offered
a more sweeping amendment which
would make taxable the income from
securities of local as we'll as Federal
Government, but this was rejected
on count of Al to 23
A recent Treasury estimate placed
the amount of wholly taX-exempt Fed
eral securities outstanding at approXi-
mately $4,000 100000, while approXi-
mately $4,000, 0,0000 900 more grants eX-
emption from the normal tax but not
from surtaxes. These would not be
affected by the Borah proposal, con-
fined to future issues.
Harrison Promises Aid.
In attempting to avert intrusion of
the question in the revenue bill,
Finance Committee Chairman Harri-
son promised Senator Borah he would
cooperate in having the committee
begin an immediate study of the sub
ject, but the Idahoan pointed out
tho fo 1,a oJtfhnrjfy m
initiate tax legislation and that the
only prospect of action on the question
was by amendment to the pending bill.
Majority Leader Barkley also pleaded
for withdrawal of the issue, complain
ing bitterly that it was being "slung
adequate consideration.
Until the setback on this amend
ment occurred, the committee had sue
ceeded in surmounting all proposals
1t considered Objectionable to the pend
ing measure. with the closest previous
vote coming on the amendment of
Senator La Toilette, Progressive, of
Wisconsin, to initiate surtaxes at the
$4,000 net income level rather than
$4,000 as at present and to increase
the rates through the middle income
brackets.
Despite vigorous appeal in which
he called on the Congress to take
the courageous way to avoid the ulti-
mate necessity of uncontrolled infla-
ton, Senator La Toilette was beaten
on this proposal by "A to 49, Imme-
diately thereafter. his plan for broad
ening the income tax base by de-
creasing exemptions was rejected with
out a record vote.
La Toilette Warns Colleagues.
Stressing the increasing need OF
Government expenditures and the re-
sultant mounting deficit, the Wiscon-
sin Senator warned his colleague that
the country eventually must choose,
as did those of Europe in the post
war era, between liquidation of public
debt by imitation or by heavy taxation.
For years past, he charged, successive
Congresses have refused to take the
courageous way of imposing taxes suf-
flcient to put the Nation on a pay-as-
you-go basis. If the ultimate choice
Is imitation, he warned further. it will
be those of low income who will
suffer most
Senators Borah and Norris, inde-
pendent. of Nebraska. led the oppo-
sition to the La Toilette proposals,
both stressing the injustice of in
creasing the tax burden of the low
income groups.
Senator Glass, Democrat, of Vir-
ginia, took occasion to support the
amendments and to add that he would
favor imposing some tax. however
small. on every person enjoying the
protection of the Government.
The surtaX amendment was esti-
mated to contain potential revenue of
$213, 100000, while the broadened base
plan was said to be worth $50, ,40O, 900
in added revenue.
Pope Proposal Defeated.
First hurdle of the day was the
amendment of Senator Pope, DEM
ocrat, of Idaho, to insert a schedule
Of tariff equalization fees in the bill.
Comparable to processing taxes, the
(See TAXES, Page A-5.)