Evening star., 1941-08-24
Senate Group Fight
Seen Over Exemptions
From Income Tax
George Hopes to Send
$3,236, ,0O0, 900 Bill to
Floor Soon After Labor Doy
By ]. A. OLEARY.

Efforts to cut personal income
exemptions below the House level
of $4,000 for married couples and
$500 for single persons promised
last night to become major issue
when the Senate Finance Commit
tee buckles down this week to re-
vision of the So ,236, ,000, 900 defense
tax bill.
Although the committee received
numerous plans for far-reaching
changes In the tax structure during
the two weeks of hearings ended
yesterday, it was generally agreed
at the Capitol that no basic new
theories of taxation will be at
tempted at this time because of the
desire of leaders to get the bill
through without delay.
Chairman George expressed hope
the committee would complete work
on the bill this week and have 1t
ready for Senate debate day OF
two after Labor Day. Some COM
mittee members thought, however,
discussion in committee might
extend over Labor Day.
One group of committee members
Is fairly confident personal ex-
emptions for individual income tax
will be cut to $500 and $3.50, but
those who hold this view indicate
rates should be adjusted at the
same time to hold down the amount
of tax that would be taken from the
lower wage groups thereby brought
IN as new taxpayers.
Sales Tax Defeat Seen.
Another group in the committee
Is opposed to taking any income tax
from those receiving less than 81 900
and $500, and one of them ex-
pressed confidence last night there
would be sufficient votes TO pre-
vent it.
An alternative that may be sug-
gested by this group is that the de-
ductions for personal exemption be
cut below $1,000 and $500, but ap-
piled only to those already sub
ject to a tax: This would increase
somewhat the levy on persons
already taxable under the House bill,
but would not reach wage-earners
who have no net income after de-
ductine $4,000 if married or $500
If single.
Proposals to adopt general
manufacturers sales tax as sub
stiute for the numerous special ex-
else levies, or to try out a fiat per-
centage tax. withheld at the source.
on all wages interest or dividends
in lieu of higher income taxes. ap-
pear to be doomed to defeat, even
though they would raise more reve-
hue than the pending bill
Advocates of these new methods
of Federal taxation will be con-
fronted with the argument that the
Treasury loses s2,400, 600 a day on
pending increases in excise taxes as
long as the bill is pending in Con-
eress. and that it would take too
long to revamp the fundamental
forms of taxation.
MAY Alter Excise List.
Nevertheless. Senator Vandenberg,
Republican. Of Michigan Is expected
to offer manufacturers sales tax
in the committee. On a 5 per cent
rate. and with food, clothing and
medicins exempt 1t would produce
$500 coo 900, according to the Mich
tgan Senator.
Senator Vandenberg said oppo-
nents Of the proposal overlook the
fact that the pending bill already
singles out numerous commodities
for special excise taxes. and that
the general sales tax. with the pro-
posed exemptions would not apply
to 80 per cent of the wage earner's
expenditures.
While a general sales tax is not
likely to be adopted. there probab bly,
will be a number of changes made
In the House list of specific excise
taxes.
Present indications are that the
new excise taxes proposed by the
House on time sold by radio sta
tions on billboard advertising and
on film used in news reels will be
eliminated.
The new House tax of IS year
for using an automobile also will
come in for considerable debate, but
any move to drop it probably would
be coupled with suggestion for an
increase in the 1-cent Federal gaso-
line tax.
Joint Returns Closed Issue.
AS the time approaches for Senate
action. it appeared unlikely that
any effort will be made to put back
the compulsory joint return for
married couples. The House knocked
the provision from the bill, leaving
married couples free to file separate
returns. A week ago there were
some indications the Treasury
might submit compromise, making
allowance for the earned income of
husband and wife, but in some con-
gressional quarters the prediction
was made yesterday the subject will
not be reopened.
The final hearing yesterday was
featured by the testimony Of w. G.
Hushing, for the American Fedora
ton of Labor, who opposed any and
kall forms of sales and payroll taxes.
DR.. Francis E. Townsend, advocate
of more liberal old-age pensions,
also went before the committee with
q last-minute proposal for adoption
of q gross income tax, universally
applied and collected monthly.
which he said has worked well in
Hawaii. DR.. Townsend expressed
fear the tax system will collapse
unless it is simphfied and predicted
the process of constantly looking
for new things to tax will bring
chaos.
Mr.. flushing said the labor groups
he represents favor the expendi-
lures being made for national de-
fense and aid to democracies, and