Evening star., 1942-06-25
Six-Bi||ion Tax Bill,
Task Of 3 Months,
Ready for House
Corporate and individual
Incomes Hit Hard; Joint
Return Plan Killed
eN the Associated Press.

924, 100000 from corporations,
individuals and steeply increased
levies on such common luxurieS
as cigarettes were tentatively
recommended to Congress today
by the House Ways and Means
Committee.
All decisions made. the committee
turned the hundreds of pages of the
complex measure over to drafting
clerks, but reserved the right to in
spect it once more before sending it
to the House finally for weeks de-
bate, beginning probably July 13.
just a fraction over two-thirdS OF
the S8,7O0, 100000 which Secretary
of the Treasury Morgenthau said
was the least" that Congress should
provide, the new taxes would offset
only a small part of the vast war eX-
penditureS voted siLce Pearl Harbor
and still would leave the Treasury
the task Of borrowing at least S39.-
000,0O0,000 in the fiscal year that be-
gins July /.
Considered 31a Months.
The committees bill, drawn after
repeated close votes on controversial
items-some of which still may be
reversed-was completed last night
after more than three and one-half
months Of consideration. 1t was
conceded that by the time it is ap-
proved by the Senate and probably
adopted finally by a Joint Senate
House Conference Committee, the
effect of proposed excise taxes would
be lost for most of this year.
President Roosevelt recently spoke
of need to expedite action on the
legislation because the loss of new
revenue to the Treasury was mount
ing daily.
Just before completing action on
the bill last night, the committee re-
versed a previous action and dis
carded a Treasury proposal to re-
quire married persons to file joint
individual income tax returns-a
move which administration experts
estimated would have yielded about
S420,000,000. 1t was eliminated at
the insistence of community prop
erty State members.
The committee built its measure
around a plan for about s5,000,-
100000 in increases to be paid, start
ing next year, by corporations and
individual income taxpayers.
Profits Tax Increased.
About s2291 100000 of that total
would come from corporation excess
profits rates which have been raised
from the current 60 per cent maxi
mum to a fiat "a per cent rate, and
from business normal and surtaxes
which have been boosted from 81
to 40 per cent.
But, on the theory that such high
excess profits rates might drive
many a corporation to the wall or
deprive it of enough reserves to
carry it through later slack busi-
ness periods, the committee ap-
proved a modification of the Brit
tsh plan of postwar credits.
That program contemplates perl
odic issuance of bonds to corpora
tions equal to IA per cent Of the
excess profits which would be sub
ject to the "a per cent rate. They
would mature in three annual IN
stallments beginning with the Sec
ond year after the war and would
provide a cushion for postwar re-
habilitation.
But, since new Federal financing
would be required to redeem these
securities, some members took the
position that the total of the bill
should be reduced by the amount OF
the estimated rebates based on this
years prospective corporate taxes.
Treasury experts reckoned that
these postwar refunds would
amount this year to S876,700,000
thus reducing the long-range yield
of the current bill to s5,047 300 900.
Individuals Taxes Doubled.
From individuals, the committee
proposed to take another $780,
100000 in a manner which would
double the March Is tax bills of the
low and middle income groups.
The members agreed first, to raise
the normal tax rate from the pres
ent to per cent. Then they
boosted the minimum surtax rate,
applicable to the first $4,000 Of net
income from to II per cent.
In addition, the committee voted
to lower the personal exemption Of
a single person from $3.50 to $500
and of married couples from sl,500
to $1,000, but retained the present
s4OO credit for each dependent.
On the theory that the addi-
tional burden might be too heavy
for the improvident, they adopted
a payroll deduction formula, begin
ming next January, amounting to 10
per cent of the difference between
taxable income and personal exemp-
tions.
Half of these 'withholdings" would
be applied against 1912 taxes due
in 1e43; the other half accumulate
in 1e43 as a credit for that years
taxes due in 1914.
Liquor Tax Increased.
In the excise field, the committee
proposed to raise about $500, ,000,000
in additional revenue, with liquor
taxes accounting for 1899 900, 900.
Distilled spirits taxes were raised
from s4 to Sc a gallon; the beer
levy was jumped from s6 to ST a
barrel, and the graduated scale of
imposts on wine was upper about
one-third.
Cigarette taxes were raised from
1925 to $3.50 a thousand, and the
Federal 5 per cent tax on train fares
was revised to 10 per cent.
Besides these and other increases,
the committee extended the excise
tax field to pari-mutuel wagers,
freight and express.
In addition, it decided that the
Post once Department should
raise second and third class mail
rates - under which newspapers,
periodicals and advertising matter
are handled-suf1icient to offset the
c,Irrert apo,,o1 deficite of Sl02 ,SOO,-