Evening star., 1939-12-07
5 New Tax Plans, t
REGARDED as Severe,
Studied for Defense
Doubt Is Expressed
Over Enactment
In Election Year
BY the Associated Press.

Congressional experts are study
ing five new tax plans designed to
raise money for the projected record
defense outlays next year.
All would give the average Amer
ican pocketbook a severe jolt, and
1t is probletnatical whether any Of
them could be enacted in an election
year.
Outline of Plans.
The five plans, which will be sub
mitted to congressional committees
If special defense levies are deemed
necessary, follows:
/. A fiat percentage increase IN
existing taxes. If an individual
owed 500 in taxes under the pres
ent schedule and If a 10 per cent
increase were ordered. for instance,
his bill would be $110.
2. Reduction of existing exemp-
tions to bring more little fellows"
under the income tax structure and
imposition of higher rates on mid
dle-bracket incomes.
3. A defense profits tax" which
would impose special high rates on
all profits in excess of those q cor
poration had made in designated
normal" year.
I. A special levy on the profits
of munitions and ornaments manu-
facturers. Such a tax was enacted
in 1915, but yielded only nominal
revenue.
5. A general sales tax. This Sug-
gestion has been criticized by Chair
man Doughton Of the House Ways
and Means Committee, and pre-
sumably would command scant sup
port.
Authorities Making Studies.
Various Government authorities
have been studying possible new
taxes since President Roosevelt sug-
gested recently that the country
should decide soon whether to
finance increased defense outlays
by additional taxation or further
borrowing.
The Chief Executive said he want
ed to provoke public discussion OF
the problem. He reported that the
next defense budget would aggre-
gate $2,250, ,000, 900, or about $780,
O0O, 900 more than that for the cur-
rent fiscal year.
Because Congress traditionally is
reluctant to enact taxes in an elec-
ton year, some informed persons
predicted the revenue question
would be deferred until 1941. They
said 1t was possible, however. that
Congress might wish to impose new
taxes rather than increase the pres
ent 81, 900 900 900 limit on the ma
tional debt. The debt stands now
at SAL $50 900 900.
Specified Percentage Favored.
OF the proposed new defense
taxes, revenue authorities said the
simplest would be the plan to in
crease the general tax burden by q
specified percentage. On the basis
of 1898 returns, it would require a
general increase of about 20 per cent
to raise an additional $500 900 900
from income levies on individuals
and corporations. A nat increase
could be applied also to the existing
excise taxes. such as those on liquor
and cigarettes.
Under one schedule being studied,
a reduction in present income ex-
emptions and high rates on middle
bracket incomes would yield about
$500 900, 900 annually. Exemptions
would be cut from 50 500 to 81 1000 for
married persons and from $1,000 to
$500 ior single individuals.
War profits taxes could be imposed
in several different ways, but the
one against "above-nOrmal" profits
is being given special study. This
system was instituted by Canada
after it entered the war.
1t was said in some quarters that
opposition to a war profits levy
might be almost as general as that
which would be expected against the
other proposed taxes. Some persons
might contend, experts said, that
such a tax would retard business
expansion, slow up employment and
decrease returns to workers and Sc
curity holders.