Evening star., 1942-06-27
SuIes Tux Needed

IN mOSC respects, the new tax Dill
which the Ways and Means Commit
tee has prepared for submission to
the House is a measure in which the
committee members may take justi-
fable pride, and as a result of the
committees efforts several of the
original tax proposals have been
nc>ably improved.
Among these might be mentioned
the decision to authorize a refund of
portion of corporate excess profits
after the war is over and to eliminate
the requirement for mandatory joint
returns by married couples. The re-
fund plan, which has the effect of
lowering the excess profits tax to 80
per cent, although it will be levied at
the "a per cent level for immediate
purposes, was approved after war
production officials had warned that
maintenance of the tax at the higher
figure, without any kind of relief,
might be expected to interfere with
the war program. Undoubtedly it
would have weakened the incentive
for prudent management and i'm
paired the financial capacity of cor
porationS to make postwar adjust
mentS, but the committee plan for
refund tends to meet these OBJ
jectiOnS. There is also good reason
to suppose that the committee acted
wisely in eliminating the mandatory
joint returns provision. Whatever
may be thought of this device as a
reVenue-raising measure, there are
many sound objections to it, and
there is no doubt that it would have
preCipitated an extremely bitter
fight in Congress. which might we'll
have delayed indefinitely the passage
Of the bill
The elimination of these items,
however. serves to underScore the one
outstanding deficiency of the tax
blll-namely, that it will not raise
the total of revenue so urgently
needed in time of war. Adoption of
the refund plan, making it necessary
to treat excess profits receipts above
the so per cent level as loan, and
the dropping of the joint return pro-
pOSal will reduce total revenue by
about S1.300000.000 Even if the
estimated receipts from "a per cent
profits tax be treated in their en-
tirety as revenue, the bill would raise
only a little under $4,000 900 900 in
new revenue-S2 700 1000 less than
the amount requested by the
Treasury.
This shortcoming, coupled with
the anticipated delay in final enact
ment of the bill and the disappoint-
ing progress in War bond sales, will
operate to the serious detriment of
the Governments effort to curb in
flation. One of the main proposed
phases of this program has been the
drawing off of excess purchasing
power through drastic wartime taxes.
The main purpose Of the tax program
in this respect is to discourage pur-
chaseS of scarce goods by siphoning
off increased earnings which might
otherwise be used in competitive buy
ing. Yet the cOmmittee-largely
because of the unsympathetic atti-
tude Of the adminiStration-has re-
fused to sanction any kind of a gen.
eral sales tax. which is probably the
best type of anti-inflationary levy
because its effect is felt at the mo-
ment Of purchase.
In view of the undoubted need for
sitter tax bill and the undeniable
efficiency Of the sales tax in any
program against initiation. it is to be
hoped that the House will add this
type of levy to the committees bill
when it is brought to the floor If
there be concern about the poSSibil-
ity of an adverse public reaction in
an election year, it might be we'll to
remember that the voters will be hurt
much more by a runaway price ad-
vance than by a reasonable sales tax.