Evening star., 1942-09-04
Early Showdown
On Sales Tax
Held Certain
Treosury's Spending
Levy Proposal Hit
As Too Complicated
BY the Associated Press.

BY the Associated Press.
Urged by Secretary OF the
Treasury Morgenthau to take
bold action" toward providing
non -infiationary war financing,
the Senate Finance Committee
today weighed a Treasury -spon-
sored spending" tax plan and
proposals for a fiat-rate levy on
retail sales and services.
With more than a majority ex-
pressing opposition to the s6,50o,-
900 900 additional revenue program
laid before the group by Secretary
Morgenthau, some committee mem
bers said the effect of the Treasury's
new proposal had been to force a
showdown between it and sales tax.
Senator Byrd, Democrat, of Vir-
ginia, said he believed Secretary
Morgenthau had left no course open
to the committee but to boost sub
stantially the s6,271 900, 900 yield in
additional taxes provided By the
House approved revenue bill.
From what the Secretary says"
Senator Byrd told reporters, "there
must be additional money raised be-
yond that provided in the House
bill. AS see it, the sales tax is the
only answer. Certainly, we can't
impose such a ridiculously-involved
spending tax as he has suggested.
It would be easily possible for
man to pay more tax than his IN
come under such levy"
Called "Too Complicated"
Cries were general that the pro-
gram was staggering" much too
complicated" and would slash the
American standard of living so per
cent and the committee unanimously
adopted a resolution by Senator
Vandenberg, Republican, OF Mich
igan, calling on the Treasury and
the congressional tax staff to submit
data on the sales tax.
At least IL members of the COM
mittee. majority, spoke unfavor"
ably of the Morgenthau plan.
The plan would call for 10 pr
cent levy on all the unexemp&Ad
spendings of single persons VINO
earned more than $500 year and
of married persons with incomes OF
more than 81 900. The latter would
be given additional exemptions OF
$3.50 for each dependent.
Calculated to raise $4,500 900 900.
this levy would be in the form of an
enforced saving, collected at the
source in most instances, which
would be returned to the taxpayer
after the war. In presenting it.
Secretary Morgenthau conceded that
the Treasury could not rely on
voluntary financing beyond this
calendar year.
Luxury Spending Levy Urged.
AS a direct new tax, Secretary
Morgenthau suggested graduated
levies of from 10 to rs per cent on
luxury spending beyond the exemp-
ton of 81 900 for an individual and
$4,000 for married couples, with $500
additional credit for each dependent.
He urged that 100000 new tax
payers be brought into the fold by
lowering regular income tax exemp-
tions from $3.50 to $500 for single
persons and from 81 500 to 81 900 for
married couples and by cutting the
S400 credit for dependents to $3.50.
Senator Byrd described the Treas
ury proposal as "the most complicat-
ed and unavoidable tax plan that has
been submitted by tax experts to the
Senate Finance Committee in my
years of membership"
ut has all of the evils and none
of the virtues of sales tax" he
added.
When the committee demanded
data on sales tax, Randolph Paul,
Treasury general counsel presented
an outline for retail sales levy.
Would Not Exempt Food.
Remarking that the Treasury was
opposed to such tax, Mr.. Paul said
that If 1t were adopted it ought to
involve fiat levy on "all retail sales
OF tangible personal property and to
services rendered in conjunction
with such sales, including repair.
fabrication and installation service
and to the services of launderies, dry
cleaners, barber shops and beauty
| parlors."
There should be no exemptions.
even for food, he said. He urged also
that it be applied to rentals of tangi-
BILE personal property, such as linens
supplied to apartment hotels, but not
| to house rent.
Mr.. Paul said the definition of re-
tail sales should include sales to final
consumers, but should exclude the
sale of fuel and industrial, CONNER
cial and agricultural machinery.
He suggested that the RESPONSE
bility for collection of the tax be
placed on retailers. Quarterly COL
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