Evening star., 1947-05-31
Community Properly
|DifferenfiaI viii Hif
|38 States taxpayers
By Jay G. Hayden

vote, refusing to eliminate the COM
muniSy-property differential allowed
to high-bracket income-tax payers
in 10 States, this still stands as
the most glaring of all Federal tax
determinations.
Because their local laws divide a
husbands income equally with his
wife and vice versa. Arizona, Cali
fornia, Idaho, Louisiana, Nevada.
New Mexico, Oklahoma, Oregon
Texas and Washington have main
tanned that the same rule should
apply to income for Federal tax
purposes.
And to the tune of about 81 1,00o.-
100000 avoidance of taxes, which
citizen of all of the other States
are required to pay, the community
States for more than Is years have
successfully resisted all attempts te
remove this inequality.
$50 Million Year Saving.
In previous years, beginning with
1921, proposals to correct the situa-
ton by requiring joint tax return.
by all husbands and wives were re.
peatedly filibustered to death BY
Senators from the 10 favored
States. The saving to these State:
under present tax laws is estimated
at s150,0oo,o0o a year.
Convinced finally that any plan
seeking equalization by bringing the
community property States up tc
the tax level of their neighbors was
hopeless, Senator Mcclellan, Demo
crat, of Arkansas proposed this time
to reverse the process. He moved
to extend to husbands and wives
everywhere the right to split thei1
collective income into twin tax re-
turns.
The effect Of this change would
have been to give 100000 persons
in 38 States, with income running
into surtax brackets, tax reduc-
tion aggregating $500, 900 900, in ad-
dition to the 80 to 101a percentage
cuts carried in the committee bill
While most of them agreed that
something should be done about the
community-property discrimination
38 Republicans and 10 Democrats
supported Chairman Millikin of the
Finance Committee in the opinion
that injection of the Mcclellan
amendment would be likely to de-
feat all tax reduction for this year
Mr.. Millikin promised, however
that community property would be
given first place among alleged tax
inequalities for another tax reduc.
ton next year.
Illustrating the extent Of the
present differential, it was brought
out that Senators from community
property States pay $646 less taxes
on their $l2,500 salaries than col
leagues from noncommunity- prop
erty States. The reason for this
differential is simply that the COM
munity-property Senator divides
his income equally with his wife
s6,250 each-thus lodging the high
er surtax applicable If the same in
come were reported all in one
basket.
On $4,000 income the tax differ
ential is $1.S81.
Derives From Spanish Law.
Community property derives from
Spanish law, prevalent in present
American territory before 1t was an
nexed. The treaty of Guadalupe
Hidalgo, ending the United States.
Mexico War, guaranteed that com.
munity-property laws existing in
territory ceded to the United States
would not be interfered with. This
annexation embraced the present
States of New Mexico, Arizona, Cali
fornia, Idaho and Nevada. Texas
and Louisiana similarly inherited
their community property laws
from former Spanish rulers.
Washington. Oregon and Okla.
homa are the other States in the
community-property group. Okla
homa at least having adopted the
system for the sole purpose of re-
ducing Federal taxation of Its
citizens.
Senators Mcclellan and Fulbright
OF Arkansas complained that their
State was surrounded on three sides
by community property territory
Many persons doing business in Ar
kansas, they said, have moved across
the line into Oklahoma, Texas or
Louisiana, in order to reduce their
taxes.
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