Evening star., 1939-03-25
By the Associated Press.

By the Associated Press.
Secretary of the Treasury Morgen-
thau's proposal to ease the social Sc
curity tax schedule met today with
the approval OF leaders in both
major parties.
There was every indication Con-
gress would translate the suggestion
into law.
Republicans hailed the Morgen-
thau move as evidence the admins
tration had come around to their
viewpoint.
Senator Wagner, Democrat, of
New York, co-author of the Social
Security Act. told reporters he
thought the Treasury proposal would
pave the way for system in which
the Government would share the
cost Of old-age pensions out of it's
general revenues, instead of letting
employers and employees pay the
whole bill.
Secretary Morgenthau, appearing
before the House Ways and Means
Committee yesterday. proposed mod
ification Of old-age insurance levies,
which now are scheduled to increase
automatically over the next three
years.
The pay roll taxes now are l per
cent on employers and per cent. on
employees. They are scheduled to in
crease one-half of per cent on each
next year, and to reach per cent on
each in 1949.
Three Plans Offered.
Secretary Morgenthau offered
three alternative plans, two of which
would reduce the scheduled rates for
= the period 1940- 1912. while the other
would retain the rates now being
paid until 1943.
The Treasury head said that I'm
periods of incomplete business re-
covery like the present. the con-
tributory old-age pension system
should be so financed as to have
the least possible deterring effect
on business" He added:
1T Is, therefore. pertinent ques-
ton whether substantial increase
IN the tax rate should be allowed
to occur at the present stage Of
business recovery"
At his press conference yester-
day. President Roosevelt said the
existing provision for the pension
reserve had been properly criticized
because it held the possibility of
an unlimited reserve.
He continued, however, the Gov
ernment would not build up a $40
600 100000 reserve, as some have
predicted. The consensus on the
reserve question was he said. that
between $2.500,00OO00 and $3,000,-
10000 would be sufficient
Senator Vandenberg, Republican,
Of Michigan, who consistently has
demanded that social security taxes
be held at their present level, told
reporters he was delighted to
know" that Secretary Morgenthau
Is at last prepared to make trust
fund instead Of jack pot out of
the proceeds of these pay roll
taxes"
Statement Issued.
Ten Republican members of the
House Ways and Means Committee
issued a statement that ''it is ap-
parent an informed and aggressive
public opinion at last has forced
the administration to acknowledge
an error and modify an iniquitous
policy.
Secretary Morgenthau's proposal
Is in line with the position taken by
Republicans in Congress = for
more than three years"
Senator Wagner said he thought
the Treasury suggestions would be
helpful to business and would elm
inate contentious that the adminis-
tration was seeking to maintain a
larger r-than-needed reserve fund.
Regarding his belief that the Gov
ernment should bear part of the
costs Of pensions, Senator Wagner
said other governments had made
such contributions for years.
The New York Senator said he did
not expect legislation along these
lines at this session,
Senators Connally, Democrat, Of
Texas and George, Democrat, Of
Georgia, members of the Senate
Finance Committee, approved the
Treasury suggestions, but said ade-
quate reserves should be maintained
at all times.
Senator King, Democrat. of Utah,
another Finance Committee men,
ber, said he thought the present l
per cent tax rate should be reduced.
II have received numerous COM
s,Isypte froy,, S,,o q II businessmen fhot