Evening star., 1941-08-21
Liquor Revenues Up
Despite Rate Rise,
George Points Out
Cites Increase to Prove
Further Hike Will Not
Foster Tax Evasion
BY J. A. O'LEARY.

tically all liquors except imported
goods, despite last years added tai
of rs cents per gallon.
He made the statement after q
group of witnesses had argued thai
If liquor taxes are made too high II
will encourage bootlegging and re.
duce revenue.
Senator George said the Treasury
reported net gain Of 1898, ,000, 900
after last years increase, as COM
pared with $3.50 900, 900 for the fisca
year 1939-40. The pending revenue
bill raises the rate on distilled
spirits from SO to 81 a gallon.
Senator Vandenberg, Republican
of Michigan. called attention to the
fact that Canada is now collecting
81 per imperial gallon while in
England the rate is SIG per imperial
gallon.
Illicit Stills Increased.
Former Representative Carl G
Bachman of West Virginia, now q
member of that States liquor con-
troll commission, gave figures tc
show that seizure of illicit stills
went up in West Virginia and Vir-
ginia after the last tax increase.
Mr.. Bachman said he also repre-
sented the National Alcoholic Bev-
erage Control Association, from
States that have the State monopoly
system of control.
Rufus w. Fontenot, State tax COL
lector from Louisiana. took the same
view of the probable results of a
higher tax.
Randolph w. Childs, executive di-
rector and counsel of the Pennsyl-
vania Alcoholic Beverage Study,
Inc, organized to cooperate with
Federal and State authorities in law
enforcement, told the committee:
I'VE wish now, for the first time,
to record our apprehension of the
dangers which we think are in
herent in the plan of taxing liquor
to the point where social evils, crime
and racketeering will return to
create an important national prob
lem which up to now we thought
was solved by the repeal of the 18th
amendment"
Exemption Repeal Urged.
Earlier, the committee heard a
recommendation that Congress wipe
out completely all tax exemptions on
personal incomes. 1t was made by
Walter A. NJ. Cooper, chairman of
the Taxation Committee of the
American Institute of Accountants.
Present exemptions are $4,000 for
married persons and $500 for single
individuals. The Treasury has rec
commended a reduction to 81 500 and
$3.50, respectively.
In a prepared statement, Mr..
Cooper, resident of White Plains,
N. Y, also urged that normal in
come taxes be withheld at the
source on all payments of salaries,
dividends, interest "and other fixed
or determinable income" Social
Security taxes now are collected in
a similar manner.
Cites Five Reasons.
The recommendations, Mr.. Cooper
said, were based on five considera-
tions:
/. The Federal Government orig
inally set up the income tax "to
add a little gravy to the Federal
revenue" Now, however. the levy
Is the Governments chief revenue
producer.
2. Our defense is being developed
10 protect the right of every one to
live and to earn any income what
soever and there Is no reason why
every person in the United States
should not contribute a share of
that burden, proportionate to the
amount of income, if any.
8. The imposition of tax on all
incomes without exemption would
tend to prevent imitation of prices
and probably would be more helpful
In accomplishing the desired result
in that respect than anything here
tofore suggested.
4. The collection at the source
would make the problem of collec-
ton simpler than 1t is today.
5. Elimination of exemption
would produce a very substantial
amount of revenue"
Insurance Taxes Later.
The Senate committee agreed yes
terday that after disposing of the
pending 1926, 100000 tax bill it
would consider proposals for taxing
mutual casualty and surety COM
panies on the same basis as capital
stock companies.
The committee voted to consider
Treasury recommendations on the
subject later, in connection with
forthcoming legislation covering ad-
changes in revenue
laws. This decision was reached
after several members had expressed
the view that hearings on the pres
ent bill should not be heightened
by considering new insurance taxa
ton.
Claims Mutual Companies Escape.
The committee acted after Ray
Murphy of New York, assistant gen.
eral manager of the Association Of
and Surety Executives,
gave what Chairman George de-
scribed as very compelling" state
ment urging taxation of large COM
mercial mutual casualty and surety
on the same basis as
capital stock companies.
Mr. Murphy said that capital stock
casualty, fire and surety companies
we're required to pay the same tax
rates as were applied to corpora
tions in other fields of industry,
whereas the mutual companies "al-
most completely escape the payment
Of Federal income taxes"
Mr.. Murphy recommended that
small mutual companies be ex-
empted by granting a 100000 credit
against income.
During the discussion, Senator
Clark, Democrat, Of Missouri. said
he intended to offer an amendment
which would impose Federal taxa
lion on such underwriters as Lloyds
Of London, a concern which he said
operated throughout the Nation