Evening star. [volume] (Washington, D.C.) 1854-1972, 1948-02-01
Democrats Seek
$500 Exemption
0nIncon1eTa Taxes
Vote on COP Bill Due
In House Tomorrow,
Passage Expected
By J. A. O'Leory

The House is all set to pass the
$500, OO0,0 900 Republican tax cut
bill tomorrow, but Senate lead
ers will wait for more evidence
of how much this Congress is
likely to spend before they act
on taxes.
House Democrats agreed yester-
day on a substitute tax program,
highlighted by a 5000 additional
personal exemption for each tax
payer, but providing less than the
Republicans in overall reduction.
With party lineup of 245 Repub-
licans to 1876 Democrats and Amer
ican-Laborite, the Democratic sub
stitute appears doomed to certain
failure. -Four seats are vacant0
1t will give administration sup
porters chance to vote for some
thing partly like President Tru-
man recommended, however.
r Close observers predict that, after
the substitute is beaten, some
Democrats will join in voting for
final passage of the Republican bill,
sponsored by Chairman Knutson of
the House Ways and Means Com
mittee.
Two Plans Compared.
Briefly, the two plans provide:
Republican-Raise the personal
exemption of each taxpayer and de-
pendent from $500 to $500; allow
married couples everywhere to split
their income, as they now do in IL
community property States; cut
personal income tax rates, starting
at 80 per cent in the low-wage
brackets and tapering off to 10 per
cent at the top.
Democratic-Raise the personal
exemption and credit for depend
ents from $500 to $7OO; allow mar
ried couples In all States to split
their income; make up most of the
revenue lost in these reductions by
re-enacting in modified from the
corporation excess profits tax.
In announcing the Democratic
plan yesterday, Minority Leader
Rayburn said the revived excess
profits tax on corporations would
return to the Treasury the $3,200,-
100000 lost by raising the personal
exemption to $500.
He estimated the splitting of in
comes for tax purposes by married
couples would cost $500, 000, 900
the net loss to the Government
under the Democratic plan.
No New Taxes in COP Bill.
The Republican bill imposes no
new taxes on corporations to offset
the $500, 000. 900 its sponsors esti-
mate is being cut from individual
taxpayers. Democrats insist the
Republican bill will cost more than
$1,000 900, 900, and threaten deficit
spending in l949.
The excess profits levy proposed
by the Democrats would give all
corporations a $4,000 exemption,
and a IS per cent increase in the
credits allowed under the wartime
excess profits law. 1t would then
apply an excess profits tax rate OF
IS per cent, as compared with IS
per cent during the war.
Mr.. Rayburn estimated the So
100000, 900 this formula will produce
is about half of what the yield
would be if the full wartime excess
profits rates were revived. The ex-
cess profits tax was repealed in 1946.
Mr.. Rayburn announced the
agreement on the Democratic sub
stitute after a conference with seven
minority members of the Ways and
Means Committee, including Repre-
sentative Doughton of North Caro-
lima, who has advocated still an
other plan which differs from both
the Knutson and Rayburn pro-
grams.
Dought0n Still Undecided.
The Democrats will have only one
chance to offer a substitute, namely,
on the motion to recommit the bill
to committee, and Mr. Rayburn said
after the conference they would go
along" with any motion to recommit
that may be Offered. He said 1T
also was the sentiment of the group
that he should offer the substitute
motion.
Later in the day, Mr.. Doughton,
ranking minority member OF the
WAYS and Means Committee, told
a reporter that neither the substi-
lSee TAXES, Page A-6D