Evening star., 1942-04-14
u. 5. Chamber Urges
Tax Of Nearly 1OPct.
On Retail Sales
Recommendations Include
Levy Of 100 Per Cent
On Excess Profits
b the Associated Press.

On Excess Profits
D. the Associated Press.
The Chamber Of Commerce of
the United States proposed today
that Congress impose q retail
sales tax at a rate approaching
10 per cent to raise $500, 900, 900
in new revenue.
Ellsworth c. Alvord, chairman Of
the chambers Federal Finance
Committee, made the recommenda-
ton to the House Ways and Means
Committee as part of war revenue
program which included increases
in both the present corporate and
individual taxes, plus q 5 per cent
added withholding tax on compen-
sation, dividends and interest paid
to individuals.
Mr.. Avord said the chamber rec
commended that the sales tax be
applied to tangible personal prop
erty with exemptions limited to
purchases by Federal, State and
local governments.
Easy to Collect.
The sales tax produces q tre-
mendous amount Of revenue" the
witness said, "it is relatively easy to
collect and 1t acts to some extent
as . brake on consumption.
The Treasury has estimated that
retail sales tax of the type we
propose viii yield s., 800 100000 for
full year Of operation. We think
this revenue is urgently needed and
will continue to be needed through
out the war. Action should not be
postponed to later day when the
necessity is now clear"
Drastic New Taxes Out.
Before she House hearing on the
tax program began, there were re-
ports that the administration had
decided against asking for drastic
new tax increases as a means Of
combating imitation.
Secretary Of the Treasury Nor
genthau was represented by his
aides as believing the present ST.
COZ, 900 tax program was suficient,
that voluntary purchases Of war
bonds could be stepped up to $11,-
000, ,000, 900 q year, thus absorbing
excess purchasing power.
Other proposals recommended by
Mr.. Alvord were:
A 100 per cent tax on excess
profits, 'but only after every effort
has been made to define true nor
NAL profits" and corporate normal
tax Of as per cent with q war surtax
Of 10 per cent.
Increased individual income taxes
to produce another $1,000, 900 900.
The Treasury has recommended in
ereasing individual taxes by So
200, ,O00, 900.
Bond Deduction Allowance.
Allowance Of a deduction to both
individuals and corporations for
money invested in non-negotiable
Government bonds, non>interest
bearing during the war, negotiable
and bearing 2 per cent interest i'm
mediately upon cessation Of hos
tilities and payable in five annual
installments. The deduction would
be limited to 20 per cent Of net in
come.
In addition, the witness said the
Government should eliminate all
non-essential Government activi-
ties and recommended that Con-
gress make considerable improve
ment IN the so-called technical pro-
visions of the present law.
AS for corporation taxes, Mr..
Alvord said that the maximum
possible rates should be imposed
approaching or even equaling 100
per cent" But he also asked for
several major changes in computing
these levies.
FOR example, he said that the
present excess profits credit OF 95
per cent of average earnings in the
19s6-193s base period should be
raised to 100 per cent and that
something should be done to relieve
the "hardships" resulting from use
Of that period.
He proposed also that corpora
tons be permitted to return to the
1910 system Of computing normal
taxes before excess profits taxes
procedure Congress reversed last
year IN order to gain additional
revenue.
Proposed Rates.
The chamber, Mr.. Alvord said,
proposes these maximum excess
profits rates: Fifty per cent of excess
profits up to rs per cent of the
credit; rs per cent Of excess profits
between Is and so per cent Of the
credit; 100 per cent Of all excess
profits over so per cent of the
credit.
The witness said that the. cham
ber's withholding tax proposal
would be in effect q gross income
tax with no deductions or credits
being permitted. r;
"The Withholding tax is admitted
ly q drastic tax, but the war re-
quires drastic financial measures"
MIR. Alvord said. mo other form
of bearable tax increase approxi-
mates the revenue yields Of this tax.
Based on preliminary estimates of
q $113,000. 900, 900 national income,
a per cent Withholding tax should
produce about $4,000, ,O00, ,O00."
Mr.. Alvord said that the Treas
ury's individual income tax increase
was "unsound, unjust and
unnecessary" and would be collected
from savings instead of consump-
ton expenditures.
AS the tax-infiation discussion
continued. Secretary Morgenthsu
was understood to be opposed to
most Of the plans fathered by a
group led by Price Administrator
Leon Henderson and Mariner s.
Eccles, chairman Of the Federal Re-
serve Board, who repeatedly favor
not only q much sitter tax program
but q simultaneous assault on all
inflationary factors as
well. This would mean freezing of
nearly all wages and prices, COM
pulsory war bond purchases, profit