Evening star., 1962-01-01


soundings of business opinion. 7
swing in favor of Mr.. Kenne,
the Investment credit" to spur
industry's spending on new
plants and equipment.
The second stage, for more
ambitious and sure to provide
the tax battle of 1868, will call
for substantial cuts in all in
come tax rates. These would be
accompanied by some drastic
surgery on special exemptions
and preferences throughout the
tax structure.
That phase will be unveiled
in a special message later in
the coming session of Congress,
to give time for year-long hear
ings, debate and public dis
cussion. The outcome is any
body'S guess.
First Stage Called Must
The first stage tax program
has must billing at the White
House, administration sources
said. 1t may get stronger ad-
ministration pushing than any
legislative proposal except pos
sibly Mr.. Kennedy's request for
broadened tariff-cutting powers.
The administrations major
sales pitch will be. This is the
most effective way, if not the
only way, to bring about a
quick start on the moderniza-
ton of United States industry
for successful competition
against low-cost foreign pro-
ducers.
The rising White House opti-
mism is discounted by a good
many tax-wise members oi
Congress. Mr.. Kennedy will gel
parts of the first-stage pro-
gram, they agree generally, but
not the whole bundle.
The administration has OBJ.
tanned a pledge from Chairman
Mills of the House Ways anc
Means Committee that the
per cent investment credit
part of the unfinished busines!
of last session, will be amone
the first orders of business fol
the tax-writing committee.
Many Concerns Converted
Administration officials pre-,
dicted that the committee
which heard almost solid op
position from industry wit
neSses last spring, will discove.
that many corporations anc
some industry associations hav,
been converted since then
Still, the opposition of sucl
important groups as the Unitec
States Chamber of Commerct
has not wavered.
Several reasons for the shift
in views have been advanced
Some industry economists anc
tax consultants, after analyzing
the probabl effects, have founc
created benefits than they
originally perceived. The Ma,
tional Association of Machine
Tool Builders, a depressed in.
dustry, has publicly announced
its Endorsement.
Moreover, the administration
has shown that it means busi.
ness about liberalizing the pres.
ent depreciation allowances tt
permit faster replacement o1
aging plants and equipment.
The administration is offer
ing a dual approach-somewhat
faster depreciation schedules or
machinery and equipment, tt
be brought into effect by 6
White House order, plus the
proposed investment credit un.
der which a firm could get 6
tax cut amounting to 8 per CEN
of its investment in new equip.
ment in any year.
Depreciation Change
The administration surprised
many last fall by whipping out
a substantial revision of the de-
probation schedules for tex
tile machinery. 1t has proved
a boon to the hard-pressed tex
tile industry.
Secretary of the Treasury
Dillon at the same time gave
stern hurry-up orders to the
Internal Revenue Service to
get a similar-but probably less
drastic-reform job done for
all other industries. Separate
schedules are being drafted for
each.
The opposition in Congress
will continue strong, it is rec
ognized, to the several tax
tightening proposals which Mr.,
Kennedy is demanding to off
set fully the estimated $1.5-
billion loss of corporate tax
collections under the invest
ment credit plan.
Will Go Further
Nevertheless, it was said, the
administration intends to stand
its ground firmly on such pro-
posalS as the Withholding of
taxes on interest and dividend
payments and the tightening
of expense account deductions.
Mr.. Kennedy will go even
further, officials said:
He will renew his call for