Evening star., 1947-11-05
US. Korea Plan Doughton Sees
|ApprovedinU.N. Veto for 6. 0.P.
Political Group Income Tax CUT
Knutson Goes Ahead
With Plans to Lower
individual Levies
BY J. A. OLeory

- s
The Republicans will run into
a third Truman veto if they pass
their $4,OO0,0O0,00O income tax
cut again this fall, Representa-
tive Doughton of North Carolina,
dean of the Democrats on tax
matters, predicted today.
| Mr.. Doughton told reporters that
unless the COP leaders can show
that we can meet our domestic
needs, pay for foreign relief and pay
on the debt, it is my opinion that
they cannot override another Pres
idential veto of their tax bill" There
is no way of knowing how much will
be needed to help Europe, he added.
President Truman twice vetoed an
income tax cut earlier this year.
Knutson Goes Ahead.
Chairman Knutson of the House
Ways and Means Committee went
ahead, however, with plans to revive
the individual income tax reduction
bill as soon as possible, and follow
that up with a comprehensive re-
writing of the entire revenue code
early next year.
Arguments in support of both
steps were before the committee to-
day in the majority report of nine
members of a 10-man Citizen Ad-
visory Committee, which spent the
summer studying inequities in the
tax system.
The majority pointed out that,
while the Governments total tax
collections are eight times what they
were in 1889, the share borne by the
individual income tax is 10 times
what it was in that prewar year.
The majority, led by former AS
sistant Secretary of the Treasury
Roswell Magill, found that there
is good reason for seeking lower
taxes on both corporate and in
dividual incomes" but gave the
right of way to individuals, on the
ground they have had only minor
relief from wartime levies.
Woll Files Own Plan.
Matthew Vol of the American
Federation of Labor-l0th member
of the advisory group-filed a
minority report, contending that the
46 major recommendations of the
majority would be of slight appli-
cation to persons with incomes of
less than $5,000." He FLED his own
plan, placing greater emphasis on
the raising OF personal exemptions,
to give most Of the relief TO the loW-
income groups If Congress decides
to 60 ahead with tax reduction at
this time.
| The minority report also contends
there is a divergence of opinion
over the wisdom of tax reduction
while inflationary forces are still
at work and the extent of foreign
aid is still undetermined.
The majority report is expected
to strengthen the determination of
House Republicans to go forward
with plans for quick revival of the
twice-vetoed bill for individual in
come tax cuts, and to follow this
up next spring with a comprenen-
sjve revision Of the whole tax struc-
ture, including changes affecting
corporations, excise levies, estate
taxes and other phases of the rev.
enue code.
No Rates Suggested.
Without attempting to suggest
rates, the Magill group urged a re-
duction in individual income tax for
all, with due regard for the cost
of living of those in the lower in
come groups and for the needs of
the balance of the economy"
Its next most important recon-
mendation was that married couples
throughout the country be permitted
to split their income for tax pur-
poses and thereby enable all to
enjoy the advantage now limited
to 13 States having community
property laws.
Both of these recommendations
are expected to be dealt with in the
first tax bill brought out of COM
mittee.
Other recommendations.
Other recommendations of the
Magill group, which probably will
be considered early next year in the
long range tax revision, include:
Il. Double taxation of div Atnd
income: The committee reco' .mends
that the individual be allowed an
appropriate credit or offset against
his own tax, for the tax paid by the
corporation with respect to his div
idends. This is the simplest method
for alleviating the present double
taxation and produces reasonable
equity.
%. Taxation of small corporations:
So long as the corporation tax rate
remains materially above the initial
tax rate on other income, it is
necessary and desirable to extend
(See TAXES, Page A-6)