Evening star., 1942-09-24
ConnaIIy Forecasts
2OO-BiIIion Outlay
For War by 1914
Nation Foeine Biggest
Tax Burden in History,
Forum Audience Told

With Americans facing the great
est financial burden in their his
tory, the war costs can be met only
by increased taxation and borrow
ing, Senator Connally, Democrat, of
Texas explained last night over the
National Radio Forum, arranged by
The Star and broadcast over WMAL
and the Blue Network
Since Pearl Harbor," he recalled,
I'VE have appropriated approx
mately 3o,o00, 900 900, and by the
end of the fiscal year 1943, it may
be in excess of $500 900 900 600"
Senator Connally, high-ranking
member of the Senate Finance
Committee, explained the pending
tax bill, designed to collect from
the people more than $4,000 000, 900
annually.
when the taxes levied by the
States, counties, cities and other
local governmental instrumental
ties are added" he said, "the total
tax burden will approximate $685.
000, 900 900, nearly one-third of the
estimated national income for 1943.
43,oO0,00o to Pay Taxes.
This increase will be secured
mainly from corporate and indi-
vidual income taxpayers through
increased profits tax rates
and increased individual normal
"a
levying of the victory tax, as pro-
vided under the Finance Committee
bill. Under the bill it is estimated
there will be approximately 49,
100000 taxpayers, Of which number
approximately 10000 900 will be new
taxpayers. While the tax burden
will be. severe the sacrifices will be
trivial in comparison to those being
made by our boys In the armed
forces"
~ Senator Connally pointed out that
the bill reduces exemptions for sin
gle persons from $3.50 to $500 and
for married men from $500 to
44,200, with the normal tax. rate
Increased from 4 to 6. per cent and
the surtax rates ranging from 13 to
90 per cent.
Those paying the victory tax,
he added, will receive q postwar
credit which will be. returned to
the taxpayer after the war or may
be taken currently to the extent
OF the credit against his regular
income tax for payment Of life in
s,lrances and debts outstanding
prior to certain date, as well as
for purchase of War bonds"
Present Levy Is Amended.
Senator Connally pointed out
that the bill amends the existing
excess profits tax by levying fat
90 per cent rate in lieu Of the grad
uated scale of rates ranging from
35 to 50 per cent. The estate and
Gift taxes are left unchanged for
the present, he said.
"One OF the innovations OF our
tax system" he added, 'is the al
lowance of postwar credit Tor
the purpose of the victory tax and
the excess profit tax. Corporations
engaged In the war effort must be
oven a real incentive to hold down
their costs and also be allowed some
sort of q reserve to tide them over
III converting their plants TO post
war purposes.
"While public opinion can be
trusted to set its face against
fiagrant and obvious abuse, a good
dnal of waste invariably arises when
businessmen may spend money to
slit their convenience, at no cost
to themselves SO long as they can
establish it as a genuine business
expense to satisfy the tax authorities.
Another consequence Of q high
excess profits tax without post
var credit is to diminish the. re-
sistance Of employers to exorbftant
wages. If higher wages are de-
naanded and are granted without
much cost to the. employer, there
is a strong incentive to concede thu
increase. A postwar credit, baset
upon taxes paid. will have tendenc.
to hold these costs down."
| Senator Connally said that witt
respect to the individual taxpayer
4 postwar credit will allow som
nest eggs to use after the war" An
he added: This is one of the grea
advantages Of the victory tax. ]
affords some postwar credit to tn
individual who may be seriousl
in need of money after the war"