Evening star., 1941-07-27
.S3,529,200,000 Tax
Boost Due 10 Pass
House This Week
Committee Reports Bill,
Sees Nation Beorine
Burden 'CheerfuIIy'
By the Associated Press.

BY the Associated Press.
Laying a 3.529 200 900 tax increase
bill formally before the House, the
Ways and Means Committee yester-
day acknowledged its unprecedented
burden on the people, but said there
was convincing evidence 1t would
be borne cheerfully' in the hgnt
of the Nations defense efforts.
The committee majority declared
the risk to life and property from
an inadequate preparedness would
make even a much heavier burden
attractive by comparison"
The bill, digging deeper than ever
before into the pockets Of individuals
and corporations TO help pay 1or
huge defense costs. will be taken up
in the House Tuesday or Wednes-
dav. with passage expected before
next week end.
Equitable Distribution.
The majority report asserted the
measure was aimed at distributing
the increased levies equitably. The
committee. the report said. con-
tinually had in mind the need 1or
keeping TO a minimum, consistent
with our defense efforts. any dis
ruption of our economy and, at the
same time. supplying needed re-
straint upon inflationary tenden-
cies"
In defense of its retention OF the
avistino alternative device for cor
porations to figure excess pronts for
lax purposes-either by the invested
capital or average earnings method
the committee said use OF the
average earnings plan appears 10
have been adequately Demon
strated.'
President Roosevelt had urged
elimination of the average earn
inps alternative in favor OF mool-
fed Treasury formula.
Seen Penalizing Many.
"A method for computing excess
| profits based upon invested capital
alone will penaliZe many corpora
tions and favor their competitors,
the committee said.
The bill. with the present law,
would meet about so per cent OF
anticipated expenditures for full
year. leaving 40 per cent 10 be
met by borrowing, the report added.
| During the World War, it said,
/ only third of the expenditures
were met bv taxes and two-thirds
bv borrowing.
A minority report filed bv 10 Re-
publicans Friday night said they
had no choice but to support the
/ general objective OF the bill. II
assailed what the Republicans called
| the "spendthrift" policies of the
| Roosevelt administration and de-
manded that the President require
| mandatory cut in non-defense
/ expenditures. 1t also said some
Of the Republicans were disappoint-
/ ed that the income tax base was
not expanded to include more tax
payers.
| Taxpayers Added.
Replying to this latter contention,
the majority said yesterday:
1T should be noted that while
the personal exemptions are not
/ decreased by this bill. large num-
ber of persons will pay income taxes
under it who do not pay under pres
ent law
The amount Of income exempt
from taxation would, in effect, be
lowered under the surtax rate sched-
ule adopted by the committee since
the surtax is applicable to the FIRST
/ dollar OF income after personal
exemption and credit for depend
ents
The first S88 above exemptions
! OF single person without depend
ents and the first 1922 above exemp-
tions OF married person without
dependents. now free from the nor
NAL tax on account OF the earned
income credit, become subject 10
surtaX"
At present the first $4,000 of net
taxable income is exempt from the
surtax. The bill would apply the
surtax TO the first taxable dollars
per cent on the first $4,000 per
cent on the next $4,000, and so on,
and no credit would be allowed for
earned income in computing the
tax.
Joint Return Defended.
Defending the proposed manda-
tory Joint income tax return for
married couples, the report denied
contentious of church leaders and
others that it would result in an
increase in divorces or adversely
affect the morals of American
families"
"A compulsory joint return in
Great Britain has been required
since 1914 it said. and their
divorce rate is not as high as in the
United States"
Under present law married cou-
Piles have the right to file separate
returns. The committee, seeking
another $1,000 900 of revenue,
proposes joint returns to prevent
husbands and wives, where both are
working, from escaping higher sur
taxes. The Jumping of two in
comes in many instances would
bring them into the higher surtas
brackets.
1T Is the opinion of your com
mittee," the ma joritv said. that
division Of income between husband
and wife as tax-saving device has
no equitable basis"
Support of Rule Urged.