Evening star., 1947-10-15
Tax Report
A Special Summary and Foreeas,
of Federal and State Tax
Developments

would prefer q manufacturer excise tax to
present high individual income taxes.
That's indicated by 4 canvass Of some
10, 900 corporate officials around the country,
Just completed by the Committee Of Ameri-
cans a non-profit survey organization. The
survey was based on 4 tax bill introduced
by Republican Representative Gearhart of
California in the closing days of the last
session Of Congress. The Gearhart bill,
among other things, would cut income taxes
and set up 4 1919 manufacturers' excise levy.
Eight questions were submitted to the In
dustry Chiefs A test sample Of replies indi-
cated Only 500 favored drastic reduction of
present taxes and tapping Of new sources Of
revenue, $50 were satisfied with the present
system, while the remainder didn't answer this
question. On the other hand, q resounding
$40 said they favored lower personal income
taxes with some increase in excise taxes to re-
capture part Of the lost revenues. Some 1870
were against this proposal.
THE POLLED EXECUTIVES were prac-
tically unanimous for equalizing income taxa
ton Of married couples in the different states.
Married residents of 13 Community prop
erty" states now can split their income for tax
purposes. thus escaping the higher surtax
brackets. This puts greater tax burden on
residents of the other 35 states, and there is
considerable agitation for legislation to cor
rect the situation. Most popular proposal ap-
pears to be the so-called Surrey plan, which
calls for q federal law permitting married
couples in all states to divide their aggregate
income.
All but 2/10 Of 10 Of the answering execu-
tives favored equalizing the taxes Of spouses
but only s49o thought this should be done by
federal law.
THE GEARHART BILL on which the ex-
ecutives' tax survey was based, would make
these main changes:
~ Impose q 1920 manufacturers excise
tax on fully processed goods with some excep-
tions notably food, housing and transporta-
ton to and from work; (2) repeal present
manufacturers' and retailers' sxcises; (3) de-
crease present wartime" rates on such items
a. dues, telephones, safe deposit boxes, tele-
phone and telegraph service; a. reduce per-
sonal income taxes to range Of 14eo to 50%
OF taxable incomes from the present 1879 to
86.45% range; (5) increase personal exemp-
tions to $1,000 and $4,000 for single and
married persons, with $500 for each depen-
dent; (6) reduce the maximum tax on long
term capital gains from 25% to 300: (7)
permit married couples to split their income
for tax purposes where 4 marital partnership
is entered into; ts) increase the ~ -ce1ts-a-
gallon gasoline tax to cents; and (e) put 4
2-cents-a-pound tax on coffee, cents pound
on tea.
Mr.. Gearhart claims his measure would
drop 10 million low income taxpayers from
the rolls and reduce government revenues by
only $54 billion.
MICROFILM RECORDS Of cash books,
journals, ledgers and voucher registers won't
be accepted for federal income tax purposes.
A recent Treasury ruling Ut. Ss66) says
however, that microflm may BE- used to record
supporting details, such as payroll records,
vouchers, Cancelled checks and invoices But
there are three conditions: The microflm
records must be kept a long a. necessary:
the taxpayer must provide = protector and
facilities for preserving the Aim and for ready
inspection; and the taxpayer must be ready
to make transcriptions Of information In the
films when required.
OREGON VOTERS, who last week defeat.
ed so sales tax for the nth time and 4
2-cents-a.packagec cigaretts tax for the second
time didn't settle all the states tax matters
on the special ballot.
Tackled on the sale tax proposal was q
troublesome proviso-that, If the tax were
defeated. personal exemptions for state income
taxes would be cut from $3.50 to $500 for q
single person, from 81 500 to 1000 for mar
ried couples The slash is to take effect on
1947 incomes.
Both the AT. Of L. and the CLIO, plan
q bitter fight against the exemption cut. They
claim the legislature had no right to make
the proviso since the state income tax IL now
yielding Z surplus. The unions will take the
case to the courts. If they're unsuccessful
there, they plan to seek 4 referendum In the
primaries next May.
A second proviso on the sales tax bill ap-
pears to have met no opposition. It provided
that, If the sales levy failed to get the voters
okay, ~ withholding tax would be imposed
as Of January i, 1s4s. This will be applicable
against income taxes. It's expected to yield
an added $500, 900 revenue from persons who
have avoided filing income tax returns.
SALES TAXES are becoming more and
more popular in states and cities.
Connecticut, Maryland, Rhode Island and
Tennessee went on the sales tax wagon this
year. bringing the total Of states imposing
them to ~. Many Of these states rely heavily
on sales taxes for their revenues. West Viz
ginia, for instance. gets about e29s Of its total
receipts from sales levies
Although New York State does not have
levy on sales. New York City imposes 4 10
sales tax.
A TAXPAYER CAN DEDUCT from his
taxable income the cost of investigating con-
templated investment, even though he decides
against making it. This IL indicated by q
U. .. Tax Court decision In the case Of Leslie
N. Duryea.
Tax ProvIow