Evening star., 1947-02-09
Tax Cut Plans
Upset by Taft
Move for Delay
Ohioon Opposes Any
Slash Before July l
Proposes Rebates
By the Associated Press

Senator Taft, Republican, Of
Ohio tossed monkey wrench
into plans of House Republicans
for quick cutback in income
taxes with an announcement
yesterday that he will oppose
making any reduction effective
before July l.
This would halve the $500 ZOO, 900
reduction which a 20 per cent cut
would make over a full calendar
year.
Senator Taft told a reporter that
while he remains convinced that
income taxes can be slashed a net
Of 20 per cent, he thinks individuals
ought to continue paying at the
present rate until the new Govern
ment fiscal year begins next July.
This would keep payroll with
holding taxes at their present level
for the first half of 1947. After July
l they would drop by whatever per-
centage Congress decides.
For persons who pay their full
years taxes in advance on March Is.
the Senator proposed rebates later
covering the last six months of the
year.
Conflicts With Knutson Plan.
This stand by Senator Taft, chair
man of the Senate Republican
Policy Committee and a member Of
the Finance Committee, collided di-
rectly with the announced. intention
of Chairman Knutson of the House
Ways and Means Committee to
rush through a tax bill making re-
auctions retroactive to January /.
Mr.. Knutson's committee has
ordered brief hearings beginning
February 10.
The hearings will be limited to
Treasury and Internal Revenue
officials, but Mr.. Knutson invited all
persons Interested in the question
of tax reduction" to file briefs with
the committee outlining their argu-
ments.
In. explaining the decision to limit
the hearings, Mr.. Knutson said that
his measure, calling for a 20 per
cent across-the- board slash, except
in the brackets above 100000, is
retroactive to January l and added:
ITO prolong the hearings in
definitely might make it necessary
to defer reductions on Withholding
tax to May or even later"
Method Not Yet Decided.
Senator Taft has not committed
himself to any particular method of
attaining the overall 20 per cent cut.
The Senator said he does not be-
lieve the Republican-co controlled
Congress can afford to increase the
Governments anticipated deficit of
50 300, 100000 for the financial year
ending June 80. A 20 per cent tax
reduction, carried back to January
1, would pile an estimated $780,
100000 or more on this deficit.
"By cutting the budget for the
years expenditures after July /, we
are going to have some room to re-
duce taxes" Senator Taft said. But
if we put in tax reductions before
then, We'll merely be increasing the
deficit that the Government piles
up this year"
In any event, Senator Taft added,
he does not look for any final action
by Congress until late in May or
June. He apparently foresaw the
possibility of a presidential veto
which might slow up, If not defeat,
tax reduction.
BY that time, the Senator noted,
Congress will have cleared many
of the major appropriation bills
and will know more surely whether
expenditures will fall within reve-
nues.
Balanced Accounts Sought.
Senator Taft's proposal for de-
layed tax slash seemed likely to
give new hope to House Republicans
who have been demanding that
some action be taken to balance
Government expenses with receipts
in the present financial year.
Chairman Taber of the House
Appropriations Committee contends
this can be accomplished if the
sale of war assets can be speeded
up to bring in an additional $1,Ooo,-
000,000 over the amount President
Truman has estimated.
Mr.. Taber argues that revenues
will be $1,000, 100000 more than the
Treasury has calculated for the IL
months ending June 80. He holds
! the rest of the deficit can be made
up by cutback in appropriations
made by the last Congress.
Any such plan apparently would
60 by the boards if income taxes
were cut as of January /, so there
may be some strong support among
House members for Senator Tafts
proposal.