Evening star., 1942-08-24
$10O Cut Voted
In Taxi Deduction
For Dependents.
81 200, $500 Personal
Exemptions Backed
By Senote Group
BY J. A. O'LEARY.

tee voted tentatively today to
lower the allowance for depend
ents from $400 to $500 a year. q
step that would add $220, ,000, 900
to the $6,271 10000 new tax bill
The committee at the same time
approved the House-voted personal
exemptions of $1,000 for married
persons and $500 for single persons
Current exemptions are $500 and
$3.50.
The action came shortly after
Senator Clark, Democrat, of Mis-.
souri, announced that subcommit-
tee which he heads would recomA
mend that the Finance Committee
write In provision whereby income
tax payments made this year would
be applied on 1912 income.
Senator Clark said the subcom.
mittee also would reject a Treasury
substitute proposal for the current.
payment plan advanced by Boards,
ley Ruml, chairman of the New York
Federal Reserve Bank. when Il
makes its formal report later IN
the week. The full committee met
behind closed doors today to begin
redrafting the House approved tax
bill.
Decisions Are Tentative.
Chairman George emphasized
that the dependents allowance de-
clslons are tentative, inasmuch a.
the committee is just beginning its
revision of the lengthy bill. He
indicated that early decisions were
subject to possible change, depend
ing on what the committee does later
IN passing on the rates to be applied
to individual income.
Todays action, however, reflected
an apparent desire to raise as
much revenue as possible, not only
10 help pay for the war but also
to check imitation.
The $500 dependent deduction
was recommended by the Treasury
BY approving tentatively the $500
exemption for single individuals.
the committee rejected the original
Treasury proposal Of $500. If this
larger exemption for single persons
had been adopted, it would have
taken approximately $196,o00ooo OF
the bill.
MIR. Rupml has proposed, with the
backing of several economists and
industrialfsts, that the 1941 income
tax liabilities Of individuals be wiped
out, and that income tax payments
made this year be applied on 194l
income.
Little Income Lost.
At the end Of the year, taxpayers
would total their income liability
and make additional payments or re-
ceive refunds SO that their income
tax bill would be paid in full. In
l943, they would make payments on
1943 taxes, assuming that their In.
come was the same as in 1912, until
| at the end of the year adjustments
could be made.
The plan would deprive the
Treasury OF little immediate revenue.
its loss being taken only when q
taxpayer died or when he ceased
to produce an income.
Senator Clark said the subcon1-
mittee had agreed to recommend
that the Ruml plan be used as q
base from which a modified form
OF current payment of taxes might
be worked out.
Committee members, he said. were
opposed to the substitute proposal
submitted by Randolph Paul, Treas
ury general counsel. {.
Under this plan, the 1941 levies
would be forgiven only for normal
and the first bracket of surtaxes,
with larger income taxpayers being
given two or three years to pay the
balance of their surtaxes.
Search for War Funds.
The Finance Committee, in itsl
search for funds to prosecute the
war, is faced not only with tha
questions of increased income tax
rates and lowered exemptions, but
also such alternative revenue-raisinr
proposals as sales tax, previously
rejected by the House.
Chairman George. who has noF
ruled out the possibility of even
higher rates than those voted by this
House, told newspapermen he be-
heved that If the burden were inss
creased, some provision should bG
made to prevent distress among perar
sons with fixed commitments, such,
as mortgage payments or life ins.
surance payments.
Senator Taft, Republican of Ohio.
declared last night that a sales tar.
was justifiable because war taxation
should reach every man, woman and.
child in the United States" Senator
Taft, speaking in tax debate overs
the Mutual Broadcasting Systemg
said he believed all Americans were,
willing and able" to contribute 10
per cent of their income to the war
effort.
James B. Carey. secretary of ths.
C1O, speaking on the same programs
termed sales tax about the most
unfair and undemocratic kind OF
taxation there is.' IL
House-Approved Measure. =
AS approved by the House the bilf,>
proposes to raise about $6,271 ,O00, 600
IN additional taxes over a full year,x
operation, with corporations CON-
SN~~~eAe eUONV p6,cG lQOls
vlduals approximately $3.50, 600, ,OO0-
and the rest from misce ellaneous neT
and increased excise taxes. ~
Arguments for and against a sales
tax appeared certain to enliven the
Finance Committee sessions. Sew
eral members, including SenatoF
Vandenberg. Republican, of Mich
lgan, are outspoken advocates or
such levy, which has been indorsed
by several national business organi.
cations.
Secretary Of the Treasury Nor
genthau and his assistants have op-
posed a sales tax. Principal opposi.-
ton has been based on the argument
that 1t would fall most heavily on
the low-mcome groups. fa'
Senator Capper. Republican, Of
Kansas said he was ready for a sales
tax on luxuries, but believed q gems.
eral sales tax would not meet the
principle OF ability to pay" GA