Evening star., 1945-10-25
.TaxCut Bill Sent
Conference
By House
Senate Victory Seen
In Bottle to Repeal
Excess Profits Levy
BY J. A. O'LEARY.

The House today sent the S.
100000 tax reduction bill to a
conference with the Senate, in
which the main battle will be
over repeal or mere reduction of
the excess profits tax.
The Senate passed the measure
late yesterday after cutting the tax
burden for 1s46 by nearly $500 ,o0o,-
900 more than the House had al
lowed.
In the conference fight, the odds
appear to favor a Senate victory for
repeal of the excess profits levy en-
January l, as means of stimulat-
ing expansion of industry and cre-
alton of jobs.
The House wants TO keep the tax
another year With the rate reduced
from 855 to &C per cent.
Conferees Are Appointed.
Speaker Rayburn appointed the
following House conferees:
Representatives Doughton of
North Carolina, Cooper of Tennes-
see, Dingell of Michigan and Rob-
ertson of Virginia, Democrats;
Knutson of Minnesota, Reed of New
York and Woodruff of Michigan,
Republicans.
The Senate named only five con-
ferees: Senators George of Georgia,
Walsh of Massachusetts, and Barley
of Kentucky, Democrats; La Fol-
lette, Progressive, of Wisconsin and
Taft, Republican, of Ohio.
The two branches are not so
far apart on relief for individuals,
except in the higher brackets, but
on corporation rates the House and
Senate committees took entirely
different approaches.
The House group, led by Repre-
sentative Doughton kept the excess
profits tax for 1916, with the rate
cut from 85.5 to go per cent, and
authorized its repeal in 1947. 1t
coupled with this decision greater
relief for corporations not subject
to excess profits taxation, by re-
ducing the combined corporation
normal and surtax rate by 4 per
cent In each bracket.
George Led Fight on Profits Levy.
Under the leadership of Senator
George the Senate wiped out the
excess profits tax now and confined
reductions in the normal corpora
ton rates to concerns with incomes
Of not more than $4,000 a year.
Another important issue facing
the conferees is whether to cut
excise taxes on a score of scommodi-
ties and services back to the 1g42
rates on July /, as proposed by the
House. The Senate knocked out
these reductions.
| The two houses are in agreement
on the provision, postponing for an
other year the automatic increase.
due January /, in the payroll tax
for old-age insurance from l per
cent to 213 per cent each, on en-
ployer and employe.
Houses Agree on Some Provisions.
| For the majority of individuals,
the two houses are in agreement on
these provisions:
| Elimination of all income tax for
/ 10000, 900 low-income wage earnerS.
| by allowing the same exemptions
against the 3 per cent normal tax
| that now apply to sJlrtax.
| A reduction from % to 19 per cent
in the effective tax rate on $4,000, 900
persons whose taxable net income
does not go above the first $4,000
surtax bracket.
Vandenberg Succeeds.
| For the 100000 persons whose
individual income goes up into the
higher surtax brackets, the percent
age of reduction varies and remains
to be settled in conference.
Senator Vandenberg, Republican,
of Michigan succeeded on the Sem
ate floor in getting some immediate
relief for small corporations on their
excess profits tax for 1915, which
will reduce their tax bills in March,
1916.
In conference, the Senate is ex-
pected to hold the best cards for
outright repeal of the excess profits
tax on January l, 1916, but that
would not be reflected in lower
payments until corporation files
its return early in 1947.
Retroactive Exemption.
! Senator Vandenberg's amendment,
also subject to conference settle
ment, provides for a retroactive ex-
emption of not less than $25, 900
from 1945 excess profits. At pres
ent there is a fiat exemption of
$4,000, plus credit based either
on invested capital or average earn
ings. Where these two offsets do
not total S25,000 the amendment
would bring company's deduction
up to that figure.
A majority of the Senate ap-
parently agreed with Chairman
George that the excess profits levy
is stumbling block to business
revival and full employment in
peacetime. 1t was enacted to con-
troll war profits.
In conference the senators Will
be supported by the Treasury De-
partment's stand in favor of repeal.
There also are indications that SEN
timent for repeal is stronger in the
full membership of the House than
it is in the Ways and Means Com
mittee, which advocates the tax
for another year.
The 100000 persons to be freed
from income tax are principally
those who now pay only the per
cent normal tax. Under existing
law only one $500 exemption from
that tax is allowed The pending
bill allows $500 for the taxpayer,
1 $500 for his wife and another $500
for each child. This relief, there
fore, does not help single persons.
-