Evening star., 1942-06-18
House Group Held
Unlikely 10 Approve
General Sales Tax
Committee Puts Finishing
Touches on Bill, Hikes
Newspaper Postal Rates
D, tire Associated Press.

~ TIRE ASSoclated PreSs.
A sales tax was conceded by its
advocates today to have only an
outside chance of approval as the
House Ways and Means Com
mittee began putting the finish
ing touches on a tax bill which
probably will produce approx
mately $6,732, 100000 in new
revenue.
Hoping to end its work in a week,
the committee still has to vote for
mally on sales tax and two other
subjects postwar credit for cor
porations which pay high excess
profits taxes and withholding of in
dividual income taxes at the source.
In actions yesterday the commit
tee approved tentatively excise taxes
on pari-mutuel wagers, coin-op-
Grated amusement devices and trans
portation by common carrier and
voted to end the second -class postage
rates now available to newspapers
and other periodicals..
Sales Tax Called Licked"
The administration was reported
TO be exerting terrific pressure
against what sales tax sentiment
remained in the committee, and one
member who has been advocating
it to make up the difference between
the present bill and the Treasury S
revised S8,7Oo,000,000 tax goal OBJ
served. 1T looks like we're licked.
Informed sources said Democratic
congressional chieftains had urged
that the bill be brought to the House
floor as soon as possible even If
that meant q sales tax would be
deferred for later consideration.
AS the committee sought to wind
up its work quickly, its tentative
actions would produce new revenue
as follows:
Corporations, s2,647 900 900.
Individuals dncluding mandatory
Joint returns, S3,114 500, 900.
Miscellaneous and excises, S971,-
100000.
The current committee trend to-
ward increased selective excise taxes
instead of a general retail sales tax
was emphasized yesterday when the
bills total revenue from excise levies
was boosted s4o8 ,0OO, 900 to $971,-
900 900.
Transportation Tax Approved.
The largest gain approved tenta-
lively was a S per cent tax on trans
portation of freight and express by
common carriers, estimated to pro-
duce $500, 100000.
Then, the committee ordered that
the second-class postal rates be
raised an amount. not determined, to
Offset the annual s78,0o0,000 deficit
of the Post Office Department in
transporting newspapers and peri
odicals. The committee retained,
however, the present total exemp-
ton for the county deliveries.
Members of the committee did
not explain details of the newspaper
and periodical proposal, but one of
the committees experts said, 1T
simply means that the present sec
ond-class rates will be raised
enough to make up the s78, 8,000, 900. "
A per cent tax on pari-mutual
wagers. designed to raise S25 ,000, 900,
was approved, and the s1o-a-year
tax on certain gambling devices was
extended to al coin-operated
amusement and gaming devices.
This was expected to raise IS ,000, 900.
Nelson Sends Letter.
The committee revealed yeSter-
day that War Production Chairman
Nelson had appealed to it to lower
its proposed corporation excess
profits tax rate from "a to 80 per
cent to leave an incentive for ef-
1ciency in production of war and
civilian necessities.
In letter to Chairman Doughton
Mr.. Nelson said he favored heavy
wartime taxation, but questioned the
advisability of the fiat "a per cent
excess profits tax approved tenta-
lively by the committee.
I'm order not to endanger ef-
ficiency in the production of arma-
ment and civilian commodities, the
tax should not be more than 80 per
cent of additional profit" the letter
said. "If a higher rate is adopted
Notwithstanding its effect on ef-
ficiency, I should suggest that any
amount which exceeds the 80 per
cent level should be treated as a
postwar credit"
Mr.. Nelson took position identi-
cal with that of Secretary of the
Treasury Morgenthau who told the
committee three months ago that
the topmost excess profits tax rates
might leave little incentive for the
maintenance OF efficiency in buSi-
ness operation"
Bond Plan Proposed.
The committees experts, headed
by Colin F. STAN, have argued that
unless a postwar credit be granted,
"a "a per cent rate will seriously
hamper the war effort. stimulate in
efficiency on the part of the cor
poration and tend toward initiation" F"
One postwar credit plan before
the committee-on which action
was deferred-would provide that
when corporation pays its tax it
would receive non-negotiable, nom
interest bearing bonds equal to 20
per cent of the net excess profits
income on which the high tax is
paid. After the war the bonds would
become negotiable and interest
bearing.
The committee deferred action
primarily because it has not acted
finally on other corporation rates.
1t has agreed tentatively to raise
the present combined normal and
surtax income rates on corporations
from 81 to 40 per cent and substi-
tuted the "a per cent excess profits
tax for the present graduated scale
of from IS to so per cent. The
Treasury asked rates ranging from
50 to rs per cent.