Evening star., 1961-04-20
TAX
Continued From First Page

Although the Presidents pro-
posalS constitute the most am
bilious tax program since 1854,
he said he will recommend
broader "long-range tax re-
form" next year.
The 1862 program, he said,
will be aimed at broadening
the tax base and reducing
preferential treatment" now
given some groups. He limited
that he may propose reduction
of tax rates in high-income
brackets. Other officials indi-
Gated that he may recommend
revision of the oil and mineral
depletion allowance.
Hit by Business, Labor
Mr.. Kennedy's interim tax
program probably will be taken
up by the House Ways and
Means Committee within the
next several weeks. He en-
phasized that his proposals are
"a set" - warning Congress
against trying to cut taxes for
investors without offSetting the
revenue losses through the
other measures he recon-
mended.
! His proposal for investment
tax credits has met opposition
in advance by business spokes-
men, who prefer accelerated
depreciation allowances, and by
union leaders, who contend tax
cuts for consumers in low-in-
come brackets would be more
effective than investment in
centiveS in promoting economic
growth.
The President said his pro.
gram to encourage business
investment would pay of
within a year by creating about
100000 new jobs. Officials
said the program would in
crease investment by perhaps
So billion and boost the gross
national product by SIS billion
in a year.
Raps Luxury Spending
On expense accounts, the
President said:
The time has come when
our tax laws should cease their
announcement of luxury
spending as a charge on the
Federal Treasury. The slogan
Its deductible'-should pass
from our scene"
Among the remedies he sug-
gested were:
Prohibition of entertainment
deductions which represent
personal exemptions in dis
guise or which confer sub
stantial tax-free personal bene-
fits to the recipients"
Restrictions on deductible
business gifts. Officials SAID
that when more detailed rec
concentrations are sent to Con-
gress in a few weeks, Mr.. Ken
nedy probably will call for a
ceiling of about $40 per gift
Curbs on excessive personal
living expenses incurred or
business travel away from
home" Informants said the
President was likely to urge
a limit of about $25 a day or
the amount deductible fol
meals and lodging.
Restrictions on the expenses
OF business trips combined
with vacations.
Normal Expenses Excluded
Discussing the expense &C.
count proposals, officials sale
there is no intention to bal
tax deduction of reasonable anc
normal business expenses, such
as modest lunches for client!
and necessary travel on bust.
ness. But they said the admin.
lStration wants to stop the
practice Of deducting the cost
OF champagne dinner parties
conventions at posh resorts
golf club dues, yachts, hunting
lodges and other "pSeudo-busi,
ness" entertainment and trave
at the expense of the Fedora
Treasury.
Mr.. Kennedy made it cleal
in presenting his business in.
centive program that he j:
most interested in longer-rangt
advantages of a program to en-.
courage expansion and mod.
ernization of the Nations plant
and equipment. The basic
theory is that the economy cal
grow at an adequate pace
increasing prosperity and pro.
viding jobs for the rising popu.
lation-only if investors expanc
productive capacity and keer
it efficient.
Fur t h e r more, economists
maintain, efficient factorie:
can reduce costs of production
preventing price initiation anc
enabling American goods tc
compete effectively on worlc
markets. World competition i,
an important factor in the bal.
ance of payments.
Cost Spread Over Years
When corporations and Other
business enterprises build fac.
tories and buy machinery, they
must spread the investment.
cost over a period of years fol
tax purposes. The portion ot
the cost written off-or de.
preciated-in any year is de.
Quoted from the company's
earnings, reducing taxable
income.
Many businessmen say they
would invest more money if the
Government permitted faster
depreciation, allowing them tc
deduct a bigger portion of the
cost from taxable income in the
early years of a factory's OF
machines life.
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