Evening star., 1942-08-09
Senate Committee
Expected 10 Reject
Sales Tax Proposal
Majority Opposes PIon,
But Fight Is Foreseen
To Force Vote on Levy
BY the Associated Press,

By tie Associated Press.
There were signs yesterday
that the Senate Finance Com
mittee would reject a proposed
sales tax despite arguments of
its supporters that it would
meet the Treasury's demand for
a $4,000, 1000 900 increase in the
new revenue bill voted by the
House.
Although proponents said they
would seek to force a vote on the
question, an informed Senator said
an informal canvass showed senti-
ment preponderantly against the
proposed levy both in committee and
the Senate itself.
This Senator, who asked not to
be quoted by name, predicted that
if the proposal were brought to the
floor it would be defeated after a
brief fight.
Republicans Favor Levy.
Two Republicans, Senators Taft
of Ohio and Vandenberg of Michi-
gan, have been the most outspoken
advocates of a sales tax on the
committee, drawing support from
such Democrats as Senators Her.
ring of Iowa and Byrd of Virginia.
The Treasury consistently has op-
posed such tax, contending that
it would prove inflationary in effect.
The House Ways and Means Com
mittee rejected proposals for the
levy, but Chairman George of the
Senate committee has said he ex-
pected a fight to write it into the
bill.
Senator George told reporters 1t
had become obvious that If the
pending bill was to be boosted to
the point where 1t would bring in
the $500 ,0OO, 900 additional revenue
requested by the Treasury. the COM
mittee would have to resort to some
new form of taxes.
The bill as voted by the House
provides for $6,271 ,000, 900 in new
revenue. This, when added to exist
ing taxation would bring Federal
revenues to between $22 900 900 900
and $4,000, 900 900, it is estimated
Withholding Tax.
Senator George has favored a
withholding tax, collected at the
source on wages, interest and divi-
dends, similar to the collection levy
placed in the bill by the House.
This latter provision would call for
the deduction of per cent of reg
ular wage, interest or dividend pay
ments, to be credited on current
income tax liabilities.
Senator George has indicated an
attempt might be made to make this
a direct tax. instead of merely an
advance collection device, a move
that would add an estimated $780,
600 600 to revenues on a per cent
basis
Senators Taft and Vandenberg
said, however, that they would de-
mand effective Government wage
controls before any attempt was
made to tax payrolls.
Senator Taft said he thought a
payroll tax OF this nature, would
bring immediate demands for tnfla-
tionary wage increases. 4 view IN
which Senator Vandenberg con-
| CURED.
Cost of Living Increase.
On the other hand, Senator
Brown, Democrat, of Michigan said
he thought present wage controls
had been much more effective than
most people supposed. Supporting
this view, he said he was informed
that the rise in the cost of living in
Canada, Which has formal wage
controls, and the United States,
which has not, had been uniform at
II per cent since the fall of 1899.
While Senator Brown said he had
received no complaints from labor
against a Withholding tax, Senator
LaFollette, Progressive, of Wisconsin
said he would oppose it because he
believed such levy would put dis
proportionate burden on lower in
come brackets.