Evening star., 1942-09-03
6 Billion Boost
|nHouseFigure
Is Held Needed
10 Pct. Spending Levy,
Held for Postwar
Rebate, Sought
BY the Associated Press.

BY the Associated Press.
The Treasury today asked
Congress to enact a revolution
ary new tax program to collect
S6 500, 100000 yearly from indi-
viduals in income and spending
taxes in addition to the s6,271,-
000, 900 in new taxes approvedaby
the House, with 500,00,000
yearly to be reserved for post
war rebates.
The new individual taxes would
make the total annual take of Fed
eral revenue about $50 500 ,000, ,000,,
with $4,000 900 900 held for postwar
rebate.
Secretary of the Treasury Morgen-
thau and his tax experts said it was
a program to restrict consumer
spending in an effort to avoid infia-
tion and would apply to all persons
subject to income taxes, with the
exemptions lowered from present
levels, and would impose a heavy
surtax on luxury spendings-spend-
ings above basic exemptions.
1t was proposed to make the
spending surtax effective as of last
Tuesday, with the regular levy effec-
tive January /, 1943.
Lower Exemptions.
Income tax exemptions would be
lowered to $500 for. single persons
and 81 900 for married couples, from
present levels of s750 and 81 500, and
credits for dependents would be cut
to $3.50 from the present $40D, or the
$500 fixed by the House. The House
set exemptions at $500 and 81 200.
However, q majority OF the Sem
ate Finance Committee, to which the
proposal was submitted. expressed
opposition. Twelve of them gen.
orally objected that the plan was
too complicated and most of these
said they would prefer an outright
sales tax.
"Staggers" Imagination.
Senator Johnson, Democrat Of
Colorado said the Treasury plan
staggered" his imagination, adding:
TT seems to me that it will lower
the standard of living in the United
States at least so per cent if it is
enacted into law in the same form it
came from the Treasury"
But Senator Walsh, Democrat,
of Massachusetts said the plan pro-
ylded minimum of $4,000, 900, 900
additional taxes, observing:
What other plan does?"
Inc committee unanimously
adopted resolution calling on the.
Treasury to submit information on
a sales tax. Senator Vandenhers.
Republican, of Michigan said the
effect was to have the Treasury SUBJ
NIT data on what it believed to be
the most equitable tax, if such a
sales levy were adopted.
Any person having earnings of
more than $500 yearly would have to
flle an income tax return, and would
be subject-in addition to income
taxes-to a spending tax of 10 per
cent II his spending exceeded s5ob.
Inc tax. In that case, would apply
to total spending, not just to the
amount in excess of $500. The same
would apply to married couples
earning above 81 ZOO and to families
with earnings above 81 900, but with
$3.50 exemptions allowed for each
individual The revenues from the
10 per cent spending levy would be
held for postwar rebate.
Luxury Tax Provided For.
But, If single person spends more
than 81 900, he then becomes subject
to spending surtax, or luxury tax,
The rate would start at 10 per cent,
in addition to the 10 per cent spend
ings tax, and would rise to rs per.
cent on amounts in excess of $4,000.
Married couples would have a S20oo
exemption before the surtax applied.
with $500 additional for each de-
pendent. Revenues from this lew
would be retained by the Govern
ment for public expenditures.
In computing the fiat 10 per cent
spendings tax, the Treasury experts
suggested that some notch provision
be inserted to avoid discrimination
between the persons whose earnings
were just below the exemption and
those just above.
They said provision might be
inserted to limit the tax to the
amount of the excess over the ex-
emption. Thus a single person who.
spent $50 would be subject to only
$40 tax instead of S5l. If he spent
only $500 he would be subject to no
tax.
Presenting the plan personally to
the committee, MIR. Morgenthau
said he was proposing tax on con-
sumner spending which will reach
into the lowest-grade income groups
above the level of bare subsistence
and will provide high penalty taxes
for luxury spending"
The program, if adopted by the
committee. would provide for So ,000,-,
900, 900 in direct new taxes, Mr.. Nor
genthau said. The remainder, or
$4,000, 100000, he said would notable
treated as revenue, but as debt to
individuals from whom it was coll
lected, to be repaid after the war.
Revenue is not the sole purpose,
nor even the primary purpose, Of
either of these proposals" he de-
clared. Their main purpose is to
restrict consumers spending"
Randolph Paul, Treasury general
counsel, explained that the refund-
(See TAXES. Page AID