Evening star., 1947-07-28
$50 Million Tax Sayinq
Seen in Plan 10 Split
Income for Couples
By Steffon Andrews
North American Newspaper AiiIanes

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By Steffon Andrews
North American Newspaper AiIianes
The Nations taxpayers stand TO
receiev a windfall Of $3.50, ,o0o, 900 In
taxes next year If q proposal to
permit married couples to split their
income Is adopted. @
The plan. under study by the House
Ways and Means Committee, would
spread community property tax ben
ef1ts to all States and automatically
reduce the taxes of nearly 5000, 900
married couples.
1t would grant couples the right
to divide equally their combined
incomes, exemptions and deductions
for income-tax purposes.
Chairman Knutson of the House
Committee says the plan has the
full backing of Republican congress
sional leaders and will be carried over
into the next regular session Of
Congress as the key program In the
general tax revision for 1948
Program Would be Optional.
The plan would be strictly optional.
AS now mapped, 1t would give mar
ried couples the choice Of dividing
income and fling two returns or
filing single returns, as heretofore.
Single persons would gain nothing.
In fact, spokesmen say 1t would
increase their relative tax load be-
cause they would not share In the
tax reductions accruing to married
couples.
Spreading the community prop
erty benefits would make Nation
wide a practice that has been in
vogue in 13 so-called Community
property States" for years. 1t will
end fight that gained velocity dur
ing the recent session of Congress
but was nipped by President Tru-
mans two tax vetoes.
Currently. Arizona, California,
Idaho. louisiana, Nevada, New
Mexico, Oklahoma, Texas. Washing
ton, Michigan, Nebraska, Oregon,
Pennsylvania and the Territory of
Hawaii have community property
benefit laws.
Taxes Automatically Reduced.
In these States, husbands and
wives are permitted to split their
total income and file separate Fed
eral tax returns. The splitting
automatically reduces the couples
toyor byy r,,ttino thay,o iofo y 1ovror
tax-rate schedule.
This division Of tax returns re-
duced the taxes of SOC, 900 couples
who took advantage of the move in
the 13 States by approximately
$3.50, ,000, 900 last year.
Congressional tax experts believe
this is rank discrimination"
against the remaining IS States
which do not have community
property laws that must be cor
rected in the next session.
In the past, efforts to force the
present 13 community property
States to repeal their laws and end
the discrimination have proved fu-
tile. The Supreme Court has upheld
the laws as constitutional and ad-
monished the Federal Government
not to interfere. T..
Marital Partnership Is Basis.
Underlying this community-prop-
erty arrangement is the concept of
marital partnership. Each spouse
presumably has right to one-half
the combined income of the husband
and wife at marriage.
Generally, the State laws provide
that all property acquired after mar
riage of after adoption of the COM
munity- property statute shall be
considered community property in
which each spouse shall have an un-
divided one-half interest.
The projected congressional legis-
lation, however, would maintain this
concept only for tax purposes. Under
the so-called surrey plan" univer-
salizing the split income-tax system,
a wife would not automatically get
a so per cent interest In her hus-
bands property.
Nor would widows be entitled to
claim so per cent interest in their
husbands estates.
Savings Could Reach so Per Cent.
The most it would do, in the opin-
ion OF experts, would be to give
one-half interest to the widow in
those States which vest her with a
one-third dover right on the hus-
bands death.
Under an amendment sponsored
by Representative Gearhart, Repub-
lican, of California this matter of
half interest would be made op-
tional. The couple could enter in q
contract giving the wife a half
interest in all property, otherwise
it would be a fiction" maintained
for tax purpose only.
Percentagewise, the saving under
UNIVERSAL community property
benefits to taxpayers would range
from 3 to so per cent. Total loss
in tax receipts to the Treasury is
estimated at $1,100, ,000, 900.
However, income splitting would
be OF no benefit to married couples
who have a combined income of
50 900 or less. To get some benefit,
married couples would have to ex-
ceed the first surtax bracket, or
have an income of more than $4,000.
1t Is this feature of the income
splitting plan that is drawing the
fire of the administration. Treasury
Secretary Snyder says unrestricted
of the plan would be
a boon but only in proportion to
the size of the couples combined
income.
Thus, the saving on a $4,000 in
come would total $14, on a $1,000
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