Evening star., 1947-05-18

Iof the bill, and will direct the floor
fight for it.
The tax bill already passed by the
House would be retroactive to last
january, and starts with q 80 per
cent cut on surtax net incomes of
81 600 or less. 1t allows 20 per
cent cut on a wide range OF salary
brackets, and ends with q 10.5 per
cent cut on incomes of $302, 400 or
more.
Retroaction Eliminated.
The Senate Finance Committee
eliminated the retroactive feature by
starting the reductions in withhold
ing rates July l, and applying half
the House percentage rates for the
remainder Of the year. In other
words, from July to December the
lowest income brackets would get
a Is per cent cut, and the top
brackets, a 5.3 per cent cut For
the full calendar year 1948 the
Senate bill would be virtually the
same as the House, except that the
cuts are more gradual between the
$79, 100 and 1902, 400 brackets.
In its formal report on the revised
bill yesterday, the Senate commit
tee contended that the total volume
of national income has been rising
since the Treasury made its original
estimates on the governments finan-
cial outlook for the new fiscal year.
Income Put at 40 Billions.
Here is how the Senate group ar
rived at its forecast that there is
ample prospect for both tax relief
and debt retirement:
1t started by taking $4,000, ,000,-
600 as a conservative estimate of
national income for the coming
fiscal year. On that basis, the Gov
ernment's receipts would be $41, 400
100000.
1t then estimated Federal spend
ing at $33 900 900, 900, which pre-sup-
poses cutting $4,500, 900, 600 from the
budget in the pending appropriation
bills.
That leaves $s,40o, ,000, 600 for tax
and debt reduction. BY eliminating
the retroactive features Of the House
bill, the tax relief for the new fiscal
year would be $4,000, 600 900, leaving
81, ,200, ,000, 900 for debt payments, or
unforeseen emergencies.
Several Days Debate Possible.
One Republican leader pointed out
last night that this is twice the $2,-
600, 100000 debt payment figure
Senators aimed at when they were
debating the overall budget ceiling
early in the session.
Although the motion to take up
the tax bill is due to be offered
tomorrow, it may provoke several
days of general debate on the
economy drive and the whole eco
nomic picture before it is voted on.
Up to yesterday the House Appro-
priations Committee had reported
out five of the new appropriation
bills, and If all of~the recommended
cuts are sustained, the total savings
would be about 81 $50, 600, 900. With
six more appropriation bills still in
the drafting stage-including the
Army-the House Committee would
have to save another $2,800, 900 900
to reach the overall economy goal of
$4,500, ,00e 600.
One Money Bill Passed.
Only one of these 1948 appropria-
ton bills has gone through the Sen
ate thus far-the Labor Federal
Security measure. On that bill the
Senate held the economy line with
the House. Whether it will do so on
the Interior bill, involving Western
reclamation projects, and on bills
affecting national defense and agri-
culture remains to be seen.
In recommending the House type
of percentage tax cuts yesterday,
the Senate Finance Committee de-
clared:
THE heavy rates now in effect
constitute serious restriction on
consumer expenditures, retard new
investment, and inhibit man
agerial initiative A general reduc-
tion of these rates at the present
time would contribute to the main
tenance of the existing high levels
of employment and output"
Lucas Sponsors Alternative.
One of the alternative Demo-
cratic tax relief plans is sponsored
by Senator Lucas, of Illinois. 1t
would raise the personal exemption
from $500 to $500, reduce the surtax
rates by percentage points In each
bracket, and permit married per-
sons throughout the country to split
their income for tax purposes. This
latter privilege of splitting income
between married couples now applies
only in the nine States having COM
munity property laws.
Senator Magnuson, in his state
ment last night, indicated he would
support tax program along the
lines of the Lucas plan.
The House Ways and Means Com