Evening star. [volume] (Washington, D.C.) 1854-1972, 1956-02-12

though modest. In our ma
tional debt" He re-emphasized
this point in his economic
message.
Surplus Into Deficit
Though Mr.. Eisenhower esti-
mates 1868 billion will pour
into the Treasury In the flscal
year starting next July. the
slightly lower estimated spend
ing Of 1853 billion could raise
and wipe out the expected
surplus II the Democratic
controlled Congress votes to
enlarge on the administrations
legislative program. It might.
for instance. appropriate more
funds for the defense and farm
help than the President has
asked.
An additional roadblock to
tax reduction may well be put
up by Chairman Wilbur Mills.
Democrat of Arkansas, Of the
House Ways and Means Com
mittee. which writes tax laws.
and Chairman Harry F. Byrd.
Democrat Of Virginia, Of the
Senate Finance Committee. Mr..
Mills takes the stand that
taxes shouldn't be cut unless
there is q serious" downturn
in the current economic boom.
Senator Byrd long has fought
for q balanced budget.
Also, Mr.. Mills headed q Sen
ate-House subcommittee which
recently studied how tax
changes might affect the econ
omy. The bipartisan subcom-
mittee reported that any
surplus In the budget should
be applied to whiting down
the Federal debt as long as
business is booming, since low
ering taxes might be imitation
airy. The subcommittee did say
though that Improvement"
In the revenue structure are
always timely"
Most economists are fore
casting q showdown in business
activity for 1856. But they say
1t will be mild and won't come
for several months. A slight
dip probably won't furnish
enough excuse to bring down
taxes to bolster purchasing
power.
However. an overwhelming
factor probably viii spur Con-
gress to cut taxes: To let the
voter know the lawmakers love
him. For the record, a tax cut
would De mace 70 ADJUST pres
ent inequities."
The probable push for low
ering taxes will come q little
later this year after corpora
tons pay the largest chunk Of
their taxes in March and
April. Then Treasury officials
will have a new total and
closer estimates on receipts.
1t could mean a bigger surplus.
At any rate. the Eisenhower
administration is expected to
present any tax program 1t has
at that time. And the Demo-
Gratis surely will want to best
1t.
Labor vs.. NAM
influential groups backing
tax revision extremes are the
AFL-CIO labor group and the
National Association OF Manu-
facturers. The recently united
labor unions back tax relief
for ''the little man." This
would up spending power and
put more money into the econ
omy. labor says. 1t wants in
creased exemptions. a cut in
the tax rate for the lowest in
come bracket and a reduction
In excise taxes. It wants to
keep the present corporation
tax rate. repeal dividend
credit" provisions and tighten
estate and gift tax structures.
NAM. on the other hand.
favors tax relief FIRST for cor
porations and the higher in-
come bracket to stimulate in
vestment in expanded business.
NAM officials admit, however.
not all tax savings would be
used for expansion.
It is also argued that If in
diyidual income rates which
range UP to 81 per cent for the
wealthiest, were brought down,
comparatively little revenue
would be lost. If the top rate
were lowered to rs per cent,
for example. Uncle Sam would
lose only $3.50 million.
Aid for Little Man
But there are not so many
votes In the upper income
brackets. One popular tax pro-
posal that has been backed by
the influential Senator Walter
George, Democrat Of Georgia,
is a 500 hike In the personal
exemption-from $500 to $500.
Such a cut would lose the
Treasury about $2.5 billion a
year.
Another idea that is gaining
strength is to split the first
tax bracket. Instead Of levy
ing q 20 per cent tax on the
first $4,000 OF taxable income,
change the levy 10 is per cent
or 10 per cent Of the Arst