Taxes: To the Floor

Although every Administration since (and including) that of F.D.R. has had its differences with Virginia's Democratic Senator Harry Byrd, each has discovered that Byrd is no blind obstructionist and that his word is as solid as his beloved Blue Ridge back home. If Lyndon Johnson ever had any doubts about that, Byrd dispelled them last week by releasing the Administration's tax bill from his Senate Finance Committee as promised, even though he personally remains dead set against it.

As expected, Byrd cast one of five votes-against committee approval of the bill. But, impressed by Johnson's budget-cutting efforts, he speeded committee action, let a bill generally similar to one previously approved by the House go to the Senate floor.

$6 a Week. In both House and Senate versions, the bill—when fully effective in 1965—would cut corporate income tax rates from the present 52% to 48%, mean a saving to firms of $2.2 billion a year. Individual income rates would range from 14% to 70%, compared with the present range of 20% to 91%. Because of minor differences, the Senate version would yield taxpayers an overall annual saving of about $11.5 billion and the House version $11.2 billion. Salary withholding rates would drop from the present 18% to 14% promptly after the President signs the bill. The 14% withholding rate would mean, for example, that an employee who makes $200 a week and claims four exemptions would have $20.80 a week withheld from his paycheck—a drop of $6 from the present amount.

Only frantic, eleventh-hour activity by the President—and the cooperation of Chairman Byrd—prevented the bill from emerging in a form that would have endangered its prospects of quick Senate approval. Committee Republicans were angered when Louisiana Democrat Russell Long rammed through an amendment that cut some $30 million off a proposed $80 million increase in taxes on oil companies. They retaliated by passing amendments to repeal some $445 million in excise taxes on luggage, jewelry, cosmetics and furs.

Sweeping Reversal. Johnson, worried that the unexpected loss of all of these minor taxes would invite countless other Senators to propose their own pet repeal ideas in Senate debate and unbalance the whole package, expressed his "deep concern" to Byrd and other committee members. With one sweeping motion, the committee then reversed its action on all of the excise taxes, thus restoring them. The vote was 9 to 8, with Byrd backing Johnson. Also lost was a proposed repeal of the 10% theater admissions tax. But the $50 million hike in oil-firm taxes survived. The house has voted a $40 million increase.

Although it has been a full year since President Kennedy first proposed his tax bill to Congress, Johnson praised Byrd's committee for demonstrating "the ability of the Congress to respond clearly and promptly to pressing national needs." Byrd, he added, had shown "impartial chairmanship" of the group. But Johnson also warned that each day's delay before final passage "withholds from our economic blood stream $30 million, produces business uncertainty, and holds off business investment decisions that would create new jobs."

As the House and Senate versions now stand, the major differences are: