Evening star., 1941-08-16
{. Of T.. Offers Plan
To Double Yield Of
House Tax Bill
; Per Cent Levy on All
individual Incomes
Is Proposed
BY J. A. O'LEARY.


The Senate Finance Committee
took weekend recess from its
study of the defense tax bill today,
after receiving from the Chamber
OF Commerce yesterday afternoon
a plan to put $500, 100000 into the
Treasury in place of the s3,236,7OO,-
900 House bill would raise.
Keynote of the chamber program
was 3 per cent tax collected at
the source on the compensation of
all individuals and on all dividends
and interest, as preferable to ex-
tending the income tax into lower
wage groups.
Ellsworth c. Alvord, one of three
chamber spokesmen, said it would
produce $2,000,000, 900 and could be-
gin to bring in revenue in January,
without the necessity of having
many new taxpayers fill out income
tax returns.
NOn-Defense Cut Urged.
A $4,000 100000 cut in non-defense
spending was another major part
of the chambers formula for dou-
bling the House revenue total. A
third proposal was that 81 900, 100000
be obtained from additional sales
and excise levieS.
AS against these increases, Mr..
Alvord recommended that the in
crease in corporate and individual
income taxes be limited to $780,
100000, whereas the House bill
would take S2,475,O 900 900 from these
sources.
John CoWleS, president of the
Minneapolis Star Journal and Tri-
bUne, asked the Senate committee
to correct what he described as a
discrimination in the House bill
against companies which have
proportionately large amount of
debt, so that big share Of their
invested capital is in the form of
borrowed money, and which also
had small or no earnings during the
base period from 1886 to 1899. Such
companies, he said, must use the
invested capital instead of the av-
erage earnings method of computing
excess profits taxes.
LoophOle Seen.
Mr.. CoWleS testified that the way
the bill is drawn, wealthy, debt-free
companies, and companies that pros
pered from 1886 to 1899, will actually
pay excess profits taxes at only a
fraction of the rate that will be paid
by companies in the other category
he described.
In presenting the chambers
broader program, Mr.. Alvord said he
would rather see Congress write a
bill based on maximum tax possibi-
lities than to continue the practice
Of drafting two tax bills a year.
Senator Taft. Republican, of Ohio,
said he had read a suggestion by
Secretary of the Treasury Morgen-
thau for an additional pay roll tax
for social security. He asked Mr..
Alvord if his proposed fiat tax on all
compensation, dividends and in
terest, collected at the source, would
accomplish the same purpose, and
Mr. Alvord agreed it would
'"I admit we might have to ad-
tourn politics to put it into effect"
said Mr.. AlVord.
George Cites Objection.
Chairman George said the objec-
ton of the Treasury to such a tax
has been that it would be difficult
10 collect from professional groups
who are not on a fixed payroll.
Mr.. Alvord said he would prefer
to see it collected from all who re-
ceive any compensation, and then
make adjustments in the case of
those who would also pay grad
uated income levy.
Senator ConnalIy, Democrat, of
Texas, thought that having the en-
ployer withhold a fiat payroll tax
at the source might destroy some Of
the psychological benefit that results
from the individual taxpayer filling
out an annual income return.
Mr.. Alvord said the wage Garner
would know it was being collected,
but predicted that after one or two
pay checks the taxpayer would not
miss it.