Tax Loopholes

Report Outline
Congress and Truman's 1950 Tax Proposals
Loopholes to Be Closed Under Truman Program
Continuing Loopholes in Federal Revenue Laws

Congress and Truman's 1950 Tax Proposals

Controversy Over Loopholes in Revenue Laws

Struggle over President Truman's tax proposals, transmitted to Congress in a special message on Jan. 23, appears likely to center mainly on the question of closing loopholes in the revenue laws. Opposition to raising corporation taxes is almost as strong as the sentiment for reducing excise taxes. Hence there may be no determined effort by the majority leadership to carry out the Truman request for rate increases to produce $1 billion of additional revenue.

The President, moreover, made his unusual threat of a veto, not in that part of the Jan. 23 message recommending tax increases, but in the section in which he said that the recommended excise relief depended on making up losses in existing revenue with revenue gained from closing loopholes. It is therefore probable that major controversies over the tax bill will revolve around changes designed to correct the inequities of the present law to which the President directed special attention. Other loopholes, not mentioned in the tax message, may come up during hearings and debate on the administration's proposals.

Major Recommendations in President's Message

President Truman made three major recommendations: (1) Reduce excise levies; (2) close tax loopholes; and (3) increase corporation and estate and gift taxes. Noting that excises were “still at substantially their wartime levels” but that the opportunities for relief were limited by revenue considerations, he suggested that reductions were most urgently needed in the levies on transportation of property, transportation of persons, long-distance telephone and telegraph communications, and the entire group of retail excises (furs; jewelry, clocks, and watches; luggage, handbags, and wallets; and toilet preparations).