Evening star., 1942-06-29
Sales Levy Expected
ToCrop Up Again
In Tax Bill Fight
Revenue Measure Faces
Bottle on 3 Other Fronts
Before Going to House
By the Associated Press.

By the Associated Press.
While technical experts pre-
pared a draft of the opce-com-
pleted S5,9OO,OOO00O tax bill,
House Ways and Means Com
mittee members said today that
four major fights, headed by new
sales tax arguments, probably
would be reopened before the
measure reaches the House.
They said opportunities un-
doubtedly would be presented to
consider again not only war con-
sumption tax" but postwar credits
for corporations and corporate ex-
cess profits tax rates, the with
holding" plan of income tax collec-
tions and proposed increases in sec
ond and third class postal rates.
Sales tax advocates we're counting
noses in the House to determine
whether such a levy might be
passed, despite the committees IA
to-9 decision against even consider
ing it. 1t has been estimated that a
5 per cent retail sales tax would pro-
duce $4,000, 100000 year.
: May Cut Pay Deduction.
Some members have contended
that the postwar credit plan, based
on redemption of bonds equal to IA
per cent of corporations excess
profits income, which would be
taxed fiat ga per cent, would not
help small companies which cur
rently might not have much excess
profits income.
Other members have argued that
the refunds, which it is estimated
would total S876 100000 on the basis
of 1912 tax liability alone, actually
would reduce the new tax load on
business. Therefore, they have sug-
gested an upward revision in the
amount of excess profits income
which is subject to taxation.
Less than "a hours after the COM
mittee completed its first study of
the new bill which contained pro-
vision for payroll deductions Of 10
per cent OF the difference between
an individuals income and his
exemptions. Secretary Morgenthau
disclosed that the withholding"
rate might be cut to per cent.
The committees plan contem-
plated that half of the deductions
starting in January would apply
against 1912 taxes due in 1913; the
other half against 1943 taxes due in
1914.
But Mr.. Morgenthau forecast the
possibility that such complicated
process might give way to a S per
cent deduction applicable against
future year payments.
Debt Exceptions Studied.
The Treasury also is studying
plan to impose higher income taxes
without penalizing too heavily per-
sons who have fixed debt charges to
meet.
The plan, called spending tax"
would be imposed on top Of the bills
present income tax. It's full effect
would be to increase the tax on in
come ordinarily spent for various
commodities but not on income used,
for example. to meet mortgage pay
ments. -.
The exemptions would cover such
things as payments on home, pur-
chase of War bonds and possibly
life insurance premiums.
The central thought was that in
come taxes could not be placed as
high as the Treasury thinks they
ought TO go without an intolerable
hardship on persons who must meet
fixed obligations such as payments
on a house Yet to exempt such
payments from the regular income
tax would be inequitable.
Consequently. the spending tax is
under study as sort of super in
come tax applying, after basic de-
ductions, to income which actually
is spent.
Hope for Recess.
A question of jurisdiction may
force abandonment of the Ways
and Means Committee decision to
require the Post Office Department
to raise second and third class
rates enough to make up current
deficits of Sl02000,O00 in those
categories. Faced with protests
against these increases from news
papers and magazines, several men,
bers said they might yield to the
House Post Office Committee which
has claimed that subject as its
prerogative.
Drafting clerks hope to have the
new bill ready for the committee's s
final inspection next week Admin
istration leaders have expressed hope
that it could be passed in the House
the week Of July 13 and that re-
cess of four or six weeks could start
July 20. when the bill will be studied
for the first time by the Senate
Finance Committee