Evening star., 1941-08-27
Senate Unit Eases
House 10 Pct. Levy
On Firms Income
Strikes Out Provision for
Tox on Earnings Above
Base Period Average
By ]. A. OLEARY.

The Senate Finance Committee
today struck from the S3,593 900 900
revenue bill the special 10 per cent
tax levied by the House on that
part of a company's earnings above
the average for base period, but
not up to the excess profits level.
The proposed House rate was
estimated to raise $4,000 900, and
was designed to reach corporations
showing improved income now, but
not sufficient to be reached by the
excess profits tax
Senator Byrd, Democrat, of Vir-
ginia said the committee vote was
approximately to /.
Opponents of the special 10 per
cent levy have contended that it,
together with normal corporation
taxes, would place too heavy a bur-
den on companies having too little
income to fall within the schedule
of excess profits taxes.
The committee also struck out
today House taxes on soft drinks
and eased the tax burden on chill
dren attending movies.
On theater admissions the House
bill had lowered the present exemp-
tion from 20 cents to 8 cents. The
Senate committee removed the g.
cent exemption but stipulated that
no tax be charged children under
II years on tickets costing 10 cents
or less and that the tax for children
between II and II be based on
the price of the ticket, at the
rate of l cent for each 10 cents or
fraction thereof. Men in uniform
also will be taxed only on the re-
duced admission price allowed them
Soft Drink Rates Out.
The House soft drink rates elm
mated were: On bottles costing 10
cents or less, 1/6 of cent: between
II and 20 cents, "a of a cent, and
over 20 cents, y a cent.
The Senate group approved with
out change the House cabaret tax of
per cent, collected from the pro-
prietor on the total bill for admis-
sion, refreshments and service.
The 7 per cent excise tax on pur-
chase OF automobiles also was re-
tanned, after a motion to raise it to
10 per cent had failed, 10 to 8.
Tax Weight Increased.
Meanwhile, it was revealed today
in tables prepared by congressional
tax experts that the great majority
of taxpayers will pay more next
March under the proposal of the
| committee to merge the 10 per cent
defense tax into new surtaX rates,
than they would if the committee
had merely lowered the personal
exemptions and left the House rates
unchanged.
The tables, compiled by the staff
of the Joint Committee on Internal
Revenue Taxation. show that in
every wage bracket from 81 800 up to
at least $50,000 the new income tax
will be higher than it would have
been even with the lowered eXemp-
tions if the committee had not ad-
justed the surtaX rates upward to
absorb the 10 per cent defense tax.
For example, a $1,000 married
worker paid nothing under the
House bill, because the personal ex-
emption was $4,000. If the Senate
| committee had merely cut his ex-
emption to $500 his tax would have
been $3.50, but with the new surtax
rate he pays so cents additional,
or $6.
Increases Analysed.
In the case of the $4,000 man, the
effect is to make the tax $138 in
stead of $135.30, an additional $2.70.
At the $1,000 level the additional
tax due to merging the defense tax
into the surtax becomes $11.70. At
the $4,000 mark the additional tax
is $139.60.
Above the $50 900 income bracket.
however, the merging of the defense
tax and surtax results in smaller
tax bill than If the two rates had
been kept separate. The $50, 900 man
pays $1,000 less under the merged
rate, although his tax is still 1902
more than the House bill, due to
lower exemptions. On $750,000 of
income the merged rate makes the
tax $3,306 less than otherwise.
Liberalized Credit Sought.
Meanwhile, it was believed an ef-
fort may be made in the Finance
| Committee or on the floor Of the
Senate to liberalize the income tax
credit for dependent children, as a
partial concession for the stiff tax
increases resulting from lowering
(See TAXES. Pa0e A-2,)