Evening star., 1942-07-25
Taft Forecasts Defeat
Of Withholding Tax
In Senate Committee
Possibility Also Seen
Of Reversing House
On Estute Levies
By the Associated Press.


Senator Taft, Republican, of
Ohio forecast today that the
Senate Finance Committee would
strike from the House se-approved
tax bill a proposal to collect in
dividual income taxes by install
ment deductions from the pay
envelopes of the Nation s workers.
The Senator, who has opposed this
section of the new $6,27l 900 900 tax
bill, said that while he had made no
canvass Of committee sentiment, he
believed = majority Of members was
inclined to vote against the proposal
because OF the steep increase it
would bring in the collection of taxes
from individuals in l943.
The projected collection levy,
which would 60 into effect next jan
uary l, would provide for the de-
duction by employers Of S per cent
less some exemptions-of the peri
odic pay check of approximately
10000, 900 persons who work for
wages.
The deductions also would apply
TO dividends and interest payments.
"a Per Cent Tax In ls43.
The individual ultimately would
pay out no more, since the amount
collected in advance would be cred-
tied against his regular income tax
liability, but during l943 his tax bill
would add up to ~ per cent OF his
wages in the ordinary brackets.
Senator Taft said he thought a
normal and surtax of 10 per cent was
enough for this class of people to
pay, but Randolph Paul, Treasury
aide, said the Treasury wanted the
advance collections because thev
would act as further brake against
imitation. =
There was some indication that
the Senate Committee also might
reverse House action on estate taxes,
The present law exempts the flrst
$4,000 OF life insurance, with 4
further specific exemption Of So
600. for each estate, regardless Of
whether any life insurance was held.
Thus an estate could total 500, 900
without this special tax being levied.
House Adopts Treasury Plan.
At the Treasury's suggestion, the
House abolished the life insurance
provision and made the tax appNca-
Die to all estates totaling $4,000 or
more, move the Treasury conceded
resulted IN the loss Of SIS 5,OOO, 600 In
revenue.
At committee hearing yesterday,
Senator Vandenberg. Republican, Of
Michigan asked Mr.. Paul il the
Treasury would object to retaining
the present law In order to get the
additional revenue. Mr.. Paul replied
1t preferred the revision to correct
inequities, but Senator Vandenbera
indicated the question would be left
open for committee action.
On another aspect of the bill. Sen
ator Taft proposed that the Senate
committee revise the House-ap-
| proved method of figuring the ex-
cess profits tax on corpora tions, 50
that additional revenue would be
collected from them.
Graduated Scale.
The House voted TO permit cor
porations which elected to use the
invested capital method OF deter
mining this tax to make 8 per cent
profit or the first 5000 900 Of CAP
italization before the excess profits
levy would apply. It approved 4
graduated scale for higher capt.
talizations, permitting 7 per cent
profit between $5.000,000 and $10,-
600 900, 3 per cent from that point to
$2OO, ,000,0 900 and per cent for all
above
Senator Taft said he could see NO
reason for discrimination" between
the taxes paid by stockholders IN
smaller and large corporations, pro-
posing that the profit level for all
above $5,0O0,000 capitalization be
made S per cent, after which the
excess profit tax Of 90 per cent would
apply
He said he was willing to concede
that some special treatment might
be given to corporations Of less than
5000 900 capital.
Chairman George predicted previ-
ously that the Senate would not act
on the revenue measure until late
August or September and said that
the committee expects 4 long, tough
struggle before its version Of the bill
is ready.