Evening star., 1955-02-26
The Political Mill
Democrats in Senate
Muy Beat Tax Plan
President Looks to Byrd and
George to Head OFF Drive
The Political Mill
By Gould Lincoln

py Souto ItnCoH
The Democrats have taken the first
round in the current tax-relief fight. By
the narrow margin of votes they were
able to save their $40 slash of individual
income taxes and put it through the
House of Representatives. BY the same
narrow margin, the House Democrats
prevented loss Of prestige for Speaker
Rayburn-who took the lead in the
maneuver which tackled the $40 income
tax cut to the administrator bill to
extend the life Of certain excise and
corporation taxes due to expire on
March 81.
Naturally, the Democrats hope to
benefit at the polls next year by reason
of their sponsoring the $40 tax cut
whether it becomes law or not Just
as naturally, they resent the charges Of
President Eisenhower that they have
shown great responsibility in fostering
the proposed income tax slash at time
when the Government is still faced with
an expected deficit of $2.5 billion at the
close of the next fiscal year. They
resent, too, the charges leveled at them
by Republican congressional leaders
that they have engaged in "shoddy
politics." which if successful could
greatly injure the financial situation
and upset the economy of the country.
Democrats Happy.
Democratic glee over their House
victory, however, is considerable. The
Democrats expect to gain favor with
some 4 million small taxpayers who.
because of the $40 slash, will not have
to pay income taxes for the calendar
year l956-even if they have to make
tax returns. They expect to curry favor,
too. with more millions of low-bracket
taxpayers who will get $40 tax credits
for themselves and for each of their
dependents. If the bill becomes law.
They expect, in fact. to gain votes. They
have engaged in considerable political
thinking and maneuvering over this
tax-cut proposal. That's politics.
But the fact the Democrats have
made a successful political stroke does
not relieve them of the charge of irre-
sponsibility. brought by the President
and backed up by the Secretary of the
Treasury. The President and Secretary
George Humphrey are opposed to any
tax reduction. unless the reductions are
warranted by reductions in Govern
ment expenditures and by large Gov
ernment tax receipts. BY great reduc-.
tions in Government spending over
the last two years it has been possible
to allow the taxpayers some SIS billion
reduction. These tax reductions helped
to take up the slack of employment
brought about by the reduction in Gov
ernment spending. That Is, the tax
reductions made available money for
spending by individuals and business
for many kinds of things-for greater
production of civilian goods, which in
turn meant employment for the work
ers who otherwise would have been out
of jobs. The President and Mr..
Humphrey, however, are not willing to
crowd that kind of operation to a point
where the deficit spending and borrow
ing Of the Federal Government must
start going upward again. Such a
process, they believe. will only result in
having the Government borrow the
money to give each taxpayer and his
dependents $40 cuts in their income
taxes, cause the Government to lose
financial standing and, in the end, cost
the taxpayers more money than they
can save through the proposed tax cut
Opposition in Senate.
The administration frankly does not
expect the Democratic $40 income tax
cut to become law. 1t looks to Demo-
cratic opposition in the Senate led by
Senator Byrd of Virginia, Senator
George OF Georgia and others, to defeat
the proposal either in the Finance Com
mittee or in the Senate itself. Even
should such opposition not prove suf-
ficient to head off the slash, there re-
mains a presidential veto as a posi-
billty. The Democratic supporters OF
the cut could not count on two-thirds
vote in the two houses of Congress to
override veto.
Mr.. Eisenhower has not promised q
tax cut for next year-although he has
said that q cut may prove warranted.
He wants to see. first what the Govern
ment's appropriations and expenditures
turn out to be In the next ten months
and what its revenues are. 1t is no
secret, however. that there will be great
pressure from Republican members Of
Congress for tax cut-which, If ad-
vocated by the administration, they can
claim for their own and which the
Democrats in Congress next year would
not dare to vote against-with an
election coming up But the President
and his Secretary of the Treasury
successfully resisted Republican drive
for tax cut in 1858. Whether they
could stave off cut in taxes in 1856
short of war breaking outs decidedly
problematical.