Evening star., 1941-08-25
Senate Unit Cuts
Income Tax
Exemptions
ST, 500 for Married
And $3.50 for Single
Persons Approved
By J, A, O'LEARY.

by y. "A. " LLhh1s
The Senate Finance Committee
voted today to lower the personal
income tax exemptions from $4,000
to 81 500 for married persons and
from $500 to $3.50 for single tax
payers.
This step, said to have been taken
by a decisive vote, will require about
1000 900 individuals to file returns
who are not now affected by the in
come tax law.
The committee also voted, IL to 5,
not to consider a. general manu-
facturers' sales tax in this bill.
Without record vote, it was like
wise decided to discard all proposals
for a special payroll tax, withheld
at the source on all earnings, in
terest and dividends.
Gift Exemption Stands.
Another decision reached prompt
ly by the committee in its first
day of oeliberation was to leave the
exemption from the estate and gift
taxes at the House level of $4,000
The vote against lowering this ex-
emption was 10 to Z.
Senator George of Georgia, chair
man, said that in lowering personal
income exemptions instead of con-
sidering a general sales levy or pay
roll tax, the committee followed the
recommendation of the Treasury
Department.
THE Treasury was perhaps sound
in taking the position that it would
like an opportunity to study the
millions Of returns from the lower
income exemptions. and at this time
was not in a position to make a
definite statement on a withholding
tax" said Senator George.
The chairman added that the
Treasury is not foreclosing that
form of tax from possible considera-
ton later, presumably If study Of
the new returns that will now come
in indicate it would be advisable.
S303, ,000, 900 More Revenue.
The Treasury experts figured that
$303, 900 900 additional revenue will
be produced by the lower exemp-
tions. OF this sum $4,000, 900 will
come from the 1000 900 persons who
will file returns for the first time
because of the lower exemptions.
The remainder of the new revenue
will come from the increase which
the lower exemptions will make in
the tax bills of those who have here
tofore been in the tax-paying class.
1t is estimated that last years
action in bringing personal exemp-
tions down from $500 and $1,000
to $4,000 and $500. respectively,
caused about 5000 900 to make re-
turns for the first time, and their
taxes will, of course, be increased by
the further cut in exemptions.
Senator Vandenberg, Republican
Of Michigan, leading advocate OF
the sales tax had estimated that
a per cent manufacturers levy
with food, clothing and medicine ex-
cluded, would have raised about ST.
SOC, 100000. In committee today
however, no specific rate or plan
was voted on. Instead, the commit
tee decided at the outset to eliminate
that proposal from consideration.
No estimate was available today
as to what it will cost the Treasury
to handle and audit the millions
of new returns from the lower-wage
groups, but last year the Treasury
figured that the cut made at that
time in personal exemption resulted
in about 100000 of additional ad-
ministrative cost, Senator George
said
Major Hurdle Cleared.
If no changes are made later in
the income tax rates, the lower ex-
emptions will restore the amount
of revenue the House cut out when
it defeated the mandatory joint re-
turn for married couples.
Although the committee still has
corporation tax schedules and a
long list Of special excise taxes on
specific commodities to consider, it
cleared one Of its major hurdles
by settling the personal exemptions
today.
This frightened the prospects for
getting the bill out of the committee
this week and commencing Senate
debate after Labor Day, next
Monday.
Must Pay SurtAx.
Although the vote in committee
is reported to have been nearly two
to one, the lower exemptions prob
(See TAXES. Page A-90