Evening star., 1941-08-17
George Predicts Move
By Treasury 10 Cut
Income Tax Base
Thinks Experts Favor
Community Levy Also;
Hearings End This Week
BY ]. A. O'LEARY.

BY j. A. u LEAhf.
Lower personal income eXemp-
tions and some new method of tax
ing the community property of hus-
bands and wives probably will be
recommended by the Treasury to
the Senate Finance Committee this
week, Chairman George predicted
yesterday
No details on the Treasury pro-
posals for changes in the $3,237,-
100000 House revenue bill are ex-
pected to be available before Tues
day. but there was immediate spec
ulation at the Capitol on the posi-
bility that the new community
property tax may be modified
substitute for the compulsory joint
return by married couples, which
the House defeated.
President Roosevelt made last
minute plea to the House two weeks
ago to lower personal exemptions,
suggesting that single persons be
cut from $500 to $3.50, and married
couples from $4,000 to $500. 1t
was presumed in Senate circles the
Treasury would follow those fig
ures if it recommends lower ex-
emptions to the Senate.
House Killed Joint Return.
At the same time the President
told the House the Treasury does
not approve of mandatory joint re-
turns, except by granting substan-
tial relief to the earned income
of husband and wife. The House
two days later killed the manda-
tory Joint return, overriding its
Ways and Means Committee, and
passed the bill without changing
personal exemptions.
Senator George said yesterday he
felt it was safe to say the Treasury
will suggest that the base be broad
ened by lower exemptions, and that
consideration be given to the taxa
ton of community property income,
"but as to how community property
Is to be defined, I do not know"
1T is obvious to me that if the
two are combined" Senator George
continued, referring to lower exemp-
tions and a community property
levy, IAN adjustment downward of
individual income tax rates will
necessarily have to be made"
While Senators are not yet in
formed as to the nature of the COM
munity property recommendation,
or whether it will make allowance
for earned income of a wife, the be-
lief was expressed by Senator
George that it would mean consider
ably less in new revenue than the
1926 900 900 that would have been
raised from the defeated compulsory
joint return.
Strong Opposition Seen.
1t was predicted also that a COM
munity property tax proposal will
encounter stiff opposition in the
Senate, as did the compulsory joint
return in the House.
Meanwhile, the Finance Commit
tee enters at 10 am. tomorrow on
the final week of public hearings,
with the proposed new tax on radio
broadcasting as the first issue ito be
debated.
One of the new excise items writ
ten into the bill in the House was
levy on the net time sales of broad
casting stations. 1t starts at per
cent on time sales above 100000
and below S500,000; 10 per cent be-
tween S50OOoO and s1.000,000, and
is per cent above that amount.
The first witness will be Chair
man James L. Fly of the Federal
Communications Commission. fol-
lowed by spokesmen for broadcast
ing groups and several labor organi-
cations.
The Finance Committee program
calls for ending the hearings this
week and devoting next week to
closed sessions to deliberate on
changes The bill will then be
turned over to experts of the Treas
ury and the committee to put a
revised draft In shape sometime
after Labor Day.
Alvord Plan Criticized.
Commenting on the suggestion
of Ellsworth c. Alvord of the United
States Chamber of Commerce, for
q fiat 3 per cent tax on all COM
pensation, dividends and interest,
to be withheld at the source like
pay roll tax, Senator George said
it was good in principle, but he
agreed with the Treasury that it
would be undesirable to apply it
generally. He said it would be bur-
densome to people whose income is
very low. Some consideration un-
doubtedly will be given to it, but
the Senator said it was doubtful
how much it would produce If rea-
sonable monthly exemptions were
allowed. The chamber spokesman
estimated its general application
would produce s2,00o,0 100000.
Some members of the Finance
Committee also are planning to seek
a test of strength before the bill
is reported on a general rnanufac-
turers sales tax, in preference to the
variety of special excise levies in
the bill
One of these special taxes in the
House bill is a new IS annual use
tax on automobiles. The Treasury
is recommending an increase in the
1-cent Federal gasoline tax in place
this levy which was estimated to
raise S162 900 900.
Ali indications are the Senate
Committee will not disturb the
House provisions giving corpora
tions the option of using invested
capital or average earnings over a
fixed period of years as base for
committing eyress nrof1ts taxes.