Evening star., 1941-08-04
A Strange Dispute

Inc QlHereQC6S Ol OpllllOll, dulOullo-
ing almost to an open controversy,
which have arisen between the Pres
ident and the House Ways and Means
Committee over the pending tax bill
suggest that in this vitally important
matter the Government is going to
great lengths to keep its left hand
from ascertaining what its right
hand is doing.
This utter lack of coordination Is
most plainly evident in the dispute
over a broadened tax base.
In his letter to Committee Chair
man Doughton, written several days
after the bill had been reported to
the House, the President, almost in
the nature of an afterthought, an
nounced that he favored a broaden
ing of the base. 1t seems highly de-
sirable to bring more persons within
the scope of the direct income tax,
and this is especially true at time
when Federal expenditures are climb
ing to unprecedented levels. Never
theless, this is a proposal concern
ing which tax experts are in sharp
disagreement. Treasury spokeSmen,
presumably representing the Presi-
dent, strongly opposed the proposal
in their testimony before the COM
mittee, and in view of this fact it IS
not strange that the committee
should have been taken wholly by
surprise by Mr.. Roosevelt's eleventh.
hour stand.
Nor is it possible to reconcile the
conflict of opinion between the COM
mittee on the one hand and the
President and the Treasury on the
other with regard to the excess
profits tax. The committee insists
on retaining it's alternative methods
either average earnings or invest
ed capital-of computing this tax. To
discard the average earnings method,
in its Judgment, would penalize
small, efficiently run corporations,
reward stock-watering and confirm
old ventures in their monopolles.
The Treasury and the President con-
tend that the tax should be computed
only on the basis of invested capital.
To retain the average earnings
method, in their judgment, means
that established corporations which
have earned substantial profits dur
ing the base years will enjoy COM
petitiye advantage over newly or
ganized concerns or those struggling
to establish themselves, and will
have the effect of confirming mo-
nopolies and protecting well-estab-
lished, prosperous businesses against
competition"
Obviously, there can be no recon-
Cling of points of view so dlametrl-
cally opposed as these, and the same
thing is true of the third subject OF
controversy the mandatory JOINT
return provision for married couples.
In this third respect, both parties
agree on the desirability of requiring
Joint returns on unearned income,
but the President and Treasury in
sist that the dictates of fair play re-
ouire tolerance of separate returns
as to earned income, while the COM
mittee Just as firmly asserts that sep
arate returns on earned income con-
stitute "a rank discrimination
against families where only one
spouse works in favor OF those where
both husband and wife are employed.
All three of these issues have long
been subject of dispute. And, Ger
tainly in the case of the second and
third, it is difficult if not impossible
for the layman to say which is right
and which is wrong. But one thing
is clear that the President could
hardly have selected a more unfor-
tunate way in which to revive these
controversies than to toss them into
the lap of Congress after the Ways
and Means Committee had spent
three months drafting tax bill and
on the eve of his departure for a
ten-day ocean cruise.