Evening star., 1942-07-28
Tax Plan Seeks
25-bi||ion Cut
In Buying Power
Senator Toft Agrees
System Is Better
Than Levies
By the Associated Press.

By the Associated Press.
A New York merchant urged
the Senate Finance Committee
today to siphon of $25, 900 ,000, 900
to $4,000, 100000 surplus pur-
chasing power" from the public
through a compulsory savings
plan designed to curb imitation.
Senator Taft, Republican, of Ohio,
said he agreed with the witness,
Julian Goldman, that compu' sorry
savings would serve better than
taxes to take up the increase in
national purchasing power.
The thing that worries me Is the
machinery" Senator Taft said. Mr..
Goldman said that despite price
ceilings. inflationary trends already
are apparent and black markets
are being created"
Senator Vandenberg, Republican,
of Michigan told other members Of
the committee that limiting indi-
vidual incomes to $25,000 a year
would yield only enough additional
revenue to foot the Nations war
bills four days and 10 hours.
Estimate Made by Treasury. :.
Senator Vandenberg said he pre-
sented the estimate, in the hearings
on the bill to raise $6,721 900 900 in
new taxes, to demonstrate lust
what might be expected from such q
limitation.
He said the Treasury Department
made the estimate, at his request.
reporting that $500, 900 900 addi-
tional revenue could be expected II
a $4,000 limit were established and
the tax rates voted by the House
were retained.
President Roosevelt has suggested
the $4,000 figure as the most an
individual should have left over
after paying his taxes during the
war.
Continuing its public hearings to
receive the suggestions of taxpayers.
the committee heard Benjamin G.
Marsh of the Peoples Lobby, pri-
vate organization.
Pay-as- You-Go Urged.
Mr.. Marsh declared that If Con-
gress did not adopt a pay-as-we-go
plan to finance the war, "a commits
sion should be created to study the
tactics and technique of repudia-
tion-that is the alternative"
Led by Senator Connally Demo
crat, of Texas, Senator's from the
eight community property States
strove, to block further consideration
by the committee of a Treasury pro-
posal to revise the method of COM
putting individual income tax nabil-
tiles in those States.
The committee was reported to
have voted 8 to to consider this
proposed change while voting IA to
2 against a Treasury suggestion that
the tax bill be amended to require
joint returns for married couples tn
all States. Such joint returns were
calculated to add $425 ,000, 600 to rev.
enues by forcing many taxpayers
into brackets carrying higher rates.
Chairman George announced the
committee had decided to disregard
Treasury proposal for Federal tax
alton of the income from State and
municipal bonds-a potential pro-
ducer of 5000, ,0O0, ,0OO-but had left
open for further action the question
Of taxing income from future issues.
The latter proposal would yield little
in immediate revenue.
Eight States Affected.
While the community propertv
State tax proposal was yet to be re-
duced to formal terms, Senator Con.
nally contended it would have the
effect Of disregarding public policy
OF dividing the family income and
property between husbands and
wives In Texas, California, Louisi-
ana, Arizona, New Mexico, Idaho,
Nevada and Washington.
He told reporters it was ian attack
on the community property States
that constitutes an assault on the
progressive law that recognizes the
equality of women In the possession
OF property acquired during mar
riage."
AS he explained the proposal, It
would make the recipient Of earned
income liable for the tax on the full
| amount Of that income, instead Of
permitting him to credit one-haN Of
it to his wife, as is directed by State
law
The Treasury argued that the
present provision permitting the
division Of income for tax purposes
in these States would deprive the
Government Of $4,000 900 yearly If
carried over into the new revenue
bill.
Example Given.
Treasury experts who declined to
be quoted by name said that In q
community property State a husband
who earned $4,000 salary, for exam
pie, and reported 5000 Of that
amount as his wife's income, paid
only $965 tax for both under the
present law.
In 40 other States, however, q
husband earning the same salary
paid tax of $1,305.
Senator Connally and others indi-
Gated they would fight vigorously
against another proposal which the
committee decided to study further
"a Treasury suggestion for elimina-
ton Of the fiat percentage method
of figuring depreciation on oil and
mining ventures.
The Government fiscal experts
urged amendments to the present
law which would increase revenues
by 5000, 100000 in this category.