Evening star. [volume] (Washington, D.C.) 1854-1972, 1947-09-16

Give P'ennsY|vanians
Stable Tax Cut
New Jersey or Maryland
Farmers in Some Fix as
Those Refused Reduction
BY David Laurence
Any one who is fortunate enough
to live in Pennsylvania gets a sub
xtantial cut In Federal taxes this
year, whereas some one living just
few feet across the boundary in
New. Jersey or New York or Mary
land 10 In the same tx as the many
millions Of other taxpayers who
were refused a tax reduction by
President Humans veto.
The same good fortune came this
year to residents Of Michigan, Ore
gon and Nebraska, which States
have Just passed what are known
Is eommunity-property laws. In
previous years nine other States
instituted the practice-Arizona,
California, Idaho, Louisiana, Ne
vada, New Mexico, Oklahoma, Texas
and the State of Washington.
The addition this year Of two
such populous and wealthy States
as Pennsylvania and Michigan
merely emphasizes the controversy
over the splitting Of family in
comes.
The Supreme Court ruled many
years ago that States have the right
to say what constitutes community
property In their borders. Hence
the Federal Government Is obliged
to follow along and decide what in
come arises from joint ownership.
Treasury Shifts Tactics.
For q long time the Treasury tried
to get legislation passed by Congress
to deal with the matter, but the
opposition Of the community prop
erty States was sufficient to block
passage. Now the Treasury has re-
versed its tactics and recommends
that the tax laws be changed so that
every one who Is married may split
the income between husband and
wife on q $3.50 basis. The Republi-
cans have promised to recommend
such legislation, too, but there is
chance the whole thing will become
entangled in the controversy over
whether or not there shall be tax
reduction for everybody-married or
single-in 1913.
Meanwhile, the taxpayers in such
States as Pennsylvania and Michi-
gan are In luck, because the tax re-
duction applies to portion Of 1947
incomes and will apply to 1913 even
If Congress fails to pass new legis-
lation.
What 1t means can be judged by
taking the case Of two married
couples, one living in Philadelphia,
for example, and having q net in
come of $4,000, all Of it being
earned by the husband. Across the
river in Camden, N. j., Is another
married couple with the husband
earning q net income of $4,000 a
year. The couple in Pennsylvania
pays q Federal income of $3.50,
whereas the New Jersey couple pays
311.s7o.
There 10 q discrimination hare OF
$3.50 In favor OF the Pennsylvania
couple-really q tax reduction with
out benefit Of Congress or the Presi-
dent.
In the upper income brackets the
saving ID oosrespondingly larger. II
there are any nillionaires TN the 10
community property States, they
certainly are getting q "break."
History OF Proposal.
The political history of the pro-
posal to split incomes doesn't reflect
credit on the Republicans. 1t was o
group of Democrats In the Senate
who, after going along for q while
with the wish Of President Truman
against all forms Of tax reduction,
finally proposed that family incomes
be split for tax purposes. The meas
ure was defeated in the Senate last
spring after the Republicans openly
pledged that they would include the
idea in their general tax revision
bill for 1913.
But the Republicans might have
gotten some tax revision instead Of
no tax revision had they made an
issue Of the community property
idea. 1t would have been difficult for
President Truman to have vetoed
this proposal as q separate PROPOSE
ton.
Next year the issue will arise in
much the same way. For 1t is quite
possible that the administration will
oppose any tax reduction and it will
become necessary for Congress to
choose between piecemeal proposals
that could be passed over a prest-
Dental veto or a measure which can
not get the necessary two-thirds
vote in both Houses to override O
veto.
Unless Congress acts on the split
income proposal, there are many
other States which will pass the
plan. 1t has been agitated already
in several State legislatures. The
plan has caught on particularly with
individuals with earned incomes be-
cause, at present, investment income
can often be divided where earned
income cannot. Some disadvantages
to State laws dividing personal prop
erty are to be noted as, for instance,
the right OF husband and wife to an
equal voice in the sale Of property
and other restrictions. So, adoption
Of the Federal plan, 1t is believed,
will stop further legislation by the
States.
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