Evening star., 1942-03-05
Senate Finance Group
Meets 10 Discuss
New Tax Program
Demand for individual,
Corporation Increases
Called Unwise by Taft
Sy the Associated Press

BY the ASSOCIATED PreSs
Chairman George, Democrat,
OF Georgia called the Senate
Finance Committee together to-
day for informal discussion of
the new tax program as evidence
appeared of senatorial dissatis-
faction with the Treasury's rec
concentrations for unprecedent-
ed increases in individual and
corporate income Ievies.
The Treasury pcograln received
generally favorable reception from
members of the House Ways and
Means Committee when 1t was out
lined Tuesday. but apparently the
reaction would be less cordial in
the other wing of the Capitol.
Senator Taft. Republican. of Ohio.
Finance Committee member,
brought the cloakroom criticism
into the open with an assertion that
the Treasury was following an "un-
wise policy" in proposing surtax in
creases which would drain off SIS per
cent of the earnings of corporations
with more than $25 900 net income
annually.
Staggering Burden.
Moreover, Senator Taft told re-
porters he doubted that individual
taxpayers could assume the stagger-
ing burden of $3,200,00C,000 in new
levies which the Treasury called
for from this source. 1t was likely,
he added, that Congress would have
to soften these increases and turn
to new forms, such as sales tax, in
order to produce the needed revenue.
The Ohio Senator said it was his
opinion that If the S3.060,0O0 1000
additional corporation taxes pro-
posed by the Treasury we're imposed,
there might be consequent sitting
Of business progress that would be
reflected not only in the manufac-
ture of essential civilian goods, but
In war production as we'll.
I'VE have got to keep the indus
trial machine running" he asserted
I have no objection to stiff increases
In excess profits taXes-in fact
think the Government ought to take
30 per cent of such profits instead of
the IS the Treasury recommended
but think it is an unwise policy to
attempt to take 55 per cent of the
normal earnings of large COM
panies."
The Treasury suggested an in
crease from the present 7 per cent
to 81 per cent in surtaxes on the
earnings OF the larger companies.
This would be in addition to the
normal "a per cent tax, which would
not be increased.
Sees Stakeholder Hit.
A corporation which paid this
much in the normal levy and sur
tax in most instances would have
little, If anything, to distribute to
small stockholders, Senator Taft
contended. Yet, he said, these
stockholders would be faced with
paying much higher individual in
come taxes.
Other members of the Senate COM
mittee were reluctant to comment
publicly on the Treasury proposals
while they still are pending before
the House Ways and Means Com
mttee, but several indicated they
shared Senator Taft's view that in
come taxpayers-both individual
and corporate-were being called on
to bear too large a share OF the
burden.
Most OF these Senators leaned
toward a sales tax as substitute
money raiser, although Randolph
Paul, Treasury tax adviser, told the
House committee earlier in the week
that If Federal and State purchases
we're exempted along with food,
medicine, clothing and fuel per
cent levy would raise only s1530O0,-
900 yearly.
State Delegates Testify.
Testifying before the House Ways
and Means Committee yesterday.
representatives of several State tax
ing agencies opposed as ''fundamen-
tally wrong" bill by Representative
Cochran, Democrat. Of Missouri to
exempt activities of defense work
contractors from State and local
sales taxes.
Maj. Gen. Eugene Reybold. chief
OF Army Engineers, however. told
the committee that the bill would
relieve the national defense effort
Of the load OF local taxation"
The proposed legislation would
exempt the Federal Government
from State. territorial and local
taxes on the sale, purchase. storage,
Use or consumption of tangible per-
sonal property used in performing
defense contracts. 1t is based on
the assumption that the Federal
Government pays the taxes to the
State either directly or indirectly, If
such taxes are imposed on the con-
frsrtors