The Waterbury Democrat., 1942-08-14
l942 TAX BILL IS
 NOT YET SETTLED
Senate Finance Committee Just Concluded Three
 of Hearings
BY JOHN R. BEAL United Press Staff CorreSpOndent)

\
 Washington, Aug. 14.-(UP)-Tht Senate finance committee today concludes three weeks of hearing on the 1922 tax bill during whict 1t turned down two major treasury proposals for increasing revenue and indicated 1t would lower some corporation rates.
 The legislation is designed to in- crease federal revenues by $6,270,- 100000 a year-raising the total gov- ernment income to about $24,000,- 100000 annually.
 Consideration of amendments will begin Aug. 24. The measure as ap- proved by the House falls nearly $25GO, ,0OO, 900 short of the goal of $8,70O,000 900 additional fedora, revenue asked by the treasury tc help finance the war.
 Secretary of Treasury Henry Mor- genthau, Jr., opened the Senate hearings by proposing a series o1 changes in the House bill to raise the additional amount. Some al- ready have been rejected, others left open for further consideration in executive session.
 Summary of Action
 1. The treasury proposed taxa tion of income from state and muni- cipal securities, estimating that such a move would yield $200,000,000 year. The committee rejected the proposal insofar as 1t affected exist ing issues-totaling about $14,000,- O0O, GOO but kept open the question of taxing future issues.
 3. The treasury recommended mandatory joint returns for married couples. It estimated that by thus forcing combination of income where both husband and wife work, an additional $200, 100000 annually could be raised. The committee re- jected this, and later ruled out a proposal to tax separately the in- come of spouses in eight community property states, whose laws permit a husband to divide his income equally with a wife who has none of her own.
 Treasury Proposals
 Among treasury proposals still to be acted on are:
 1. Elimination of the existing 27h per cent depletion deduction al loved oil and gas companies and thu IS per cent depletion deduction al lowed mining companies.
 2. New excise taxes on soft drinks candy and chewing gum together with. increased rates on beer, wine cigarets, gas, oil and transportation House-approved increases in th' excise field fell $426, 900, ,000 short O treasury proposals.
 3. Stiffer estate and gift taxes The treasury proposed raising $316, 100000 more year from this sourc, than the House bill provided.
 On corporation taxes, Morgenthal and Randolph Paul, treasury gen eral counsel, coupled the final de cision on normal and surtax rat might be increased to 50 per cent The House bill carries 45 per cent and many Senate committee mem bers feel 40 per cent is high enough
 The treasury proposed 90 pc cent excess profits rate with 8 Il per cent credit to be refunded af ter the war. The House bill pro. vides no post war credit.
 There has been little discussion in the Senate Hearings of individua income rates. The House bill raise! the existing nc-mal rate of four pel cent to six per cent and impose. sIrtaxes ranging from B per cen to 82 per cent. The treasurey pro- posed retention of the four per cent normal tax but graduating the sur. tax more steeply from l2 per cent to 86 per cent.
 Senate committee members have indicated opposition to the House approved withholding tax, undel which employers will deduct five pel cent from pay envelopes starting next January as an advance pay. ment on 1943 taxes. The hearing! developed considerable interest in { pay-as-you-go plan advanced bJ Beardsley Ruml, chairman of thu Federal Reserve Bank of New York which would in effect forget" 1o4l taxes and put individual taxpaleyrl on a current basis with their obli- gations to the treasury.
 Most controversial issue outside the above proposals is the fedora, retail sales tax. It advocates in the committee assert that sentiment ap- pears to be against it at present . but that if changes in House rates result in reduced revenue there might be enough support to put fl across as . last resort attempt tc raise more money.