Income Tax Relief

Report Outline
Struggle Over Shares in Tax Relief
Income Tax Changes Since World War I
Effects of Tax Reduction on National Economy
Removal of Income Tax Inequalities
Special Focus

Struggle Over Shares in Tax Relief

House Action on Knutson Across-The-Board Bill

In Accordance with 1946 campaign promises, the Republican majority in the House of Representatives adopted the Knutson bill (H. R. 1), Mar. 27, 1947, cutting individual income taxes 10.5 to 30 per cent. The vote on passage was 273 to 137, largely on party lines, with only three Republicans voting “nay” and only 40 Democrats voting “yea.” If the bill becomes law in its present form, it will grant the first major reduction in income tax rates in more than 20 years.

Minority members of the House charged that the bill was “steam-rollered” to passage by its sponsor, Rep. Knutson (R., Minn.), new chairman of the Ways and Means Committee. It was given only two days of public hearing before the committee, consideration in the House was limited to two days, and no amendments were permitted from the floor.

The Senate will take more time, and present indications are that it will modify the bill materially. Sen. Taft (R., O.) has expressed belief that a majority of his colleagues would approve the Knutson bill if it were made effective July 1, instead of retroactively effective as of Jan. 1, 1947. Democrats have freely predicted that President Truman will veto the Knutson bill unless it is greatly changed before it reaches the White House. The majority for the bill in the House was one vote short of the two-thirds that would be needed to override a veto.