Evening star., 1942-08-31
Spending Tax Plan
Meets Opposition
In Committee
Senators Supporting
Sales Levy Critical
Of New Proposal
z, the Associated Press.

2, the Associated Press.
A forthcoming Treasury pro-
posal for imposition of stiff new
tax on individual spending ap-
pears headed for a stormy re-
ception in the Senate Finance
Committee.
Proponents OF retail sales tax
served notice, shortly after Chair
man George had announced that
the committee would receive toe
new Treasury proposals tomorrow,
that they did not like the levy which
Senator George outlined to reporters
Yesterday.
,sAs explained by the chairman, a
tax of possibly 10 per cent would
be levied against all money spent by
an individual over and above certain
specified exemptions. tor
George said Treasury officials hoped
that such levy, which would be
in addition to regular income and
other taxes. would yield between
four and five billion dollars and at
the same time check inflationary
spending.
Clark Calls Plan Vicious
Calling the proposed new tax
vicious in some of its aspects, Sem
ator Clark, Democrat, of Missouri,
said he felt it would be a good deal
more Objectionable than an out
right retail sales tax, which he also
has opposed.
Senator Herring, Democrat, of
Iowa, who has been urging his
colleagues to write a sales tax into
the new revenue bill now pending
before the committee, objected that
a spending tax would reach only
those who are liable for income tax.
Because of the exemptions that
would be granted" he told reporters,
the people who don't make income
tax returns wouldn't be touched by
1t. 1t is my understanding that
$4,000 100000 in annual income
now escapes taxes and that is where
the imitation threat lies"
Il would prefer a straight sales
tax applied to everybody alike" he
added.
Senator George, who disclosed the
outlines of the plan without indors-
ing or opposing it. said he did not
believe the proposed new tax would
AFFECT persons with incomes of ST 900
or less annually.
AS he explained it, the individual
would be permitted to deduct from
the amount of money he actually
spent during the year exemptions
such as those that are made for
income tax purposes, plus certain
other expenditures.
Included in this latter group of
deductions might be payments on
mortgages, debts and insurance.
money put into savings accounts or
invested in Government Bonds or
capital assets.
Security Tax Boost Urged.
Ihe Treasury, meanwhile, was re-
ported to have served notice on the
Finance Committee that it would
seek to increase social security taxes
10 . combined total of S per cent on
employers and employees after work
on the revenue bill is completed.
Estimating that levy of this ma
ture would yield $4,000, 900 900 an
nually-an increase of approximate
ly $500 100000 over the present
revenue from this source-Senator
Vandenberg. Republican of Michi-
gan, said he and the others were
prepared to offer vigorous opposi-
ton.
Under terms of the Social Security
Act rs revised In 1899, the present
levy OF per cent on employers and
] per cent on employees would in
crease automatically on January
to per cent on each.
Senator Vandenerg said he
thought there was no reason, so
far as social security benefit pay
ments were concerned, for even
this increase. He said that the
social security reserve fund now ex-
ceeds 80 times the annual benefit
payments estimated in the next five
years, while the law requires a fund
only three times as large.