Evening star., 1940-06-16
Defense Tax Bill
Passage in Senate
This Week Sought
Byrd's 10 Per Cent
Budget Cut Proposal
Approved by Committee
BY ]. A. O'LEARY.

Government non-defense budget
during the next IL months.
The Senate group approved the
House tax structure with these few
changes:
Eliminated increase tobacco
taxes, and made up the difference
by broadening the amusement tax
to reach all admission tickets from
10 cents up. with the bulk of the
added revenue expected to come
from motion picture theaters.
- Struck out the 100-gallon exemp-
tion the House allowed retail liquor
dealers from the new tax on stocks
on hand.
Increased the tax on rectifying
whisky from 80 to 40 cents gallon.
Basic Salaries Not Affected.
Senator Byrd, Democrat, of Vir-
einia, author of the economy amend
ment- which he estimated would
save about s450000 900, emphasized
that 1t does not reduce basic Gov
ernment salaries as fixed by the
Classification Act He, added, how
ever, that it may mean not filling
vacancies as they occur. and create
the possibility of furloughs in some
agencies before the end of the fiscal
year. Any savings going into the
Treasury from the economy amend
ment would be in addition to the
81 $1,000, 900 raised by the new taxes.
The Virginia Senator also empha-
sized that it does not require a hori-
2ontal cutting of 10 per cent from
each departmental appropriation.
He explained that it vests discretion
with the President to determine
where cuts can be made to save 10
per cent of the budget total, after
segregating the national defense pro-
gram and fixed charges. such as in
terest on the debt, veterans benefits
and trust funds.
The Senator said he had an infor-
NAL opinion from the Budget Bureau
that, since salaries are written into
the Classification Act, they would
come within the category of fixed
charges.
Farm Benefits Exempt.
Informed sources at the Capitol
predicted that. with fixed charges
not affected, the bulk of the saw
1ngs would have to be attained by
slowing up construction programs
not connected with national de-
tense. Senator Byrd said farm
benefits based on contracts with
the farmers could not be curtailed,
but that some of the reduction
could come from the farm parity
price fund, and from certain other
Federal subsidies.
Even If the Senate adopts the
Byrd amendment, its final passage
would depend on the attitude Of
the House when the revenue bill
goes to conference. Chairman
Doughton of the Ways and Means
Committee, who will head the
House coferees, would not venture
a prediction last night on the out
come of the economy amendment.
The main floor battle over the
revenue bill is likely to center
around an effort to add a schedule
OF new excess profit taxes, designed
to swell the yield from industries
benefitting from the national de-
fense program and European war
orders.
Senator La Toilette, Wisconsin
Progressive, was working on such
an amendment last night. but was
not ready to announce the rates
or probable yield. He said, how
ever, it would apply to 1910 profits.
Supertax Amendment Sought.
At the same time, Senator Byrd
announced he would offer in the
Senate an amendment to make the
10 per cent supertax already in the
bill retroactive on 1889 income. AS
the bill stands this supertax would
be added next March to the total
tax of individuals and corporations
on 1910 income. The Byrd amend
ment would raise another $3.50
100000 by going back and levying
an additional 10 per cent on the
bills now being paid on 1899 in
come.
Meanwhile, Senator Bone, Demo-
crat, Of Washington also made plans
TO offer as an amendment his war
profits tax plan, which would have
no effect unless the United States
went to war but would then auto
matically apply rates designed to
recapture profits
Senator Connally, Democrat. Of
Texas, also introduced Yesterday a
War-prof1ts tax bill, which would
take effect only in the event Of
war, but was not certain he would
attempt to attach his plan to the
pending emergency national de-
tense revenue program. His bill
Is based on comprehensive study
of the subject by a Senate sub
committee three years ago.
All Of these far-reaching changes
not approved by the committee
yesterday are expected to encoun-
ter opposition from administration
forces, who, under the leadership
of Chairman Harrison of the FL
nance Committee, are anxious to
put the bill through in substan-
tally its present form.
They will argue that more time
is needed to work out excess profits
rates, and will point out that the
House committee already has voted
to instruct the Treasury to pre-
pare another tax bill between now
and the next session. that would
prevent the creation of war mil
lionaires"
Silver Rider Attached.
BY vote of Ia to 6, the COM
mittee attached to the bill as a
rider the proposal of Senator Town
send, Republican, of Delaware to
halt the Treasury's purchase of for
eign silver. The Senate previously
has passed this as a separate prop
osition and efforts may be made
to eliminate it from the tax bill
on the floor.
The new schedule of theater taxes
adopted yesterday follows: Tickets
costing cents or less, no tax; from