Evening star., 1953-09-01
4% Reduction Seen
In Corporation Tax
As Compromise Plan
BY the Assoeiated Press

Representative Simpson, Re-
publican, Of Pennsylvania said
today that Congress may COM
promise on a cut of about per
cent in corporation income taxes
on April l.
Any such compromise. he in
dicated, would be part of a pro-
gram aimed at averting bitter
tax clashes between the EiSen-
hover administration and some
key Republicans in Congress,
such as f1ared during the past
session.
Under present laws. corpora
tion income taxes are due to
drop automatically on April /
from SO percentage points to At
on a corporations taxable in
come-which would mean that
a corporations tax bill would
be lowered by about 10 per cent.
That would cost about 50 billion
annually in revenue at a time
when the administration is
struggling toward a balanced
budget.
Fight Seen Over Delay.
esident Eisenhower has
urged indefinite postponement
Of the cut, but the request Is
sure to stir a fight in Congress.
Mr.. Simpson. third-ranking
Republican member of the tax
writing House Ways and Means
Committee, said the final result
may be to fix the rate at so per-
centage points-roughly split
ting the difference between the
administration and supporters
of the full reduction scheduled.
Such a result would lower cor
poration's tax bill by about per
cent.
Mr.. Simpson said in an inter-
view this might produce enough
revenue to balance the budget if
the administration, as some
Congressman predict, also calls
for a broader and more uniform
system Of excise (sales) taxes.
Gen. Eisenhower, in a tax
message to Congress last May,
said that although the SO per
cent corporate rate is too high
for the long run. the budget will
not permit a reduction in both
individual and regular corporate
tax rates. A reduction in indi-
vidual taxes must come first, for
the benefit of the entire
economy"
The administration has said it
will let a 10 per cent cut for in
dividual income taxpayers take
effect as scheduled on January l.
The excess profits tax also dies
on the same date, complicating
the drive to keep revenue high
enough for pay-as-you-go Fed
eral spending.
Postponement of any corporate
income tax cut would just about
balance out the loss in revenue
from the excess profits tax.
Reed Pledges Fight.
Chairman Daniel A. Reed of
the Ways and Means Commit
tee, who fought to the last ditch
against Gen. Eisenhower's move
to extend the profits tax from
July / to January l. already has
indicated opposition to extend
ing present corporate rates.
Mr.. Reed said recently the
scheduled reductions is prom
ise and ought to be fulfilled.
Mr.. Simpson, however, said
the committee and the admin
istration may agree on other tax
benefits for business which would
mollify opposition to so per
cent corporate income rate.
These benefits could be MADE
effective later than April /, to
soften the revenue loss at this
time.
Actually. the corporate rate is
made up of two taxes-a nor
NAL" tax of 80 per cent on net
income plus a 'surtax" of % per
cent on all profits above $25, 900
a year. The scheduled change
would be in the normal rate.
Thus all corporations would be
affected, even the relatively few
making less than $4,000.