Unison

For four days representatives of the House and of the Senate in joint conference struggled to reconcile the two tax reduction bills passed (TIME, Feb. 22) by their respective chambers. There was a divergence of some $125,000,000 between the two bills. So there was good ground for conference.

The greatest struggle was over estate taxes, which the House members were eager to retain and which the Senate wished to abolish. Finally a 20% maximum estate tax, with a personal exemption of $100,000, was agreed on. So the joint conference finally gave birth to the third tax reduction bill of the season--a compromise in which all shades of political affiliations were represented, but in which the tax views of the Administration appear uppermost.

The main features of the new tax bill as compared with the old tax law:

Normal taxes. 1 1/2% to 5% (formerly 2% to 6%).

Personal exemptions. For single persons $1,500 (formerly $1,000); for married persons $3,500 (formerly $2,500); for dependents $400 each (no change).

Earned Income Deduction. 25% of tax (no change). All income under $5,000 net is "earned" (no change). Maximum income which may be classed as earned $20,000 (formerly $10,000).

Surtaxes. 1% to 20% on amounts of greater than $100,000 (formerly 1% to 40% on amounts greater than $500,000).

Estate taxes. Exemption of $100,000 (formerly $50,000). 1% to 20% on amounts greater than $10,000,000 (formerly 1% to 40% on amounts greater than $10,000,000). Credit on inheritance taxes paid to states of 25% (no change) during 1926, and credit of 80% thereafter. (The old estates taxes were reduced 15% retroactively in regard to the old law).

Gift taxes. Abolished (formerly 1% to 40%*). Retroactive reduction the same as for estate taxes.

Automobile taxes (formerly 5%). On trucks, abolished; on passenger automobiles, 3%; on tires and parts, abolished.

Theatre admissions tax. One cent on each ten cents or fraction (no change). Tickets costing 75-c- or less (formerly 50-c-) exempt.

Tax publicity. Abolished. In addition many minor taxes were abolished, including those on the following items: Cameras, films, firearms, ammunition, smokers' articles, slot machines, mah jong sets, objets d'art, jewelry, bowling alleys and pool rooms, shooting galleries, riding academies, yachts, deeds and conveyances. Taxes on lower-priced cigars were reduced.

The estimated loss of revenue resulting from this bill is $387,811,000 for the calendar year of 1926 and $343,000,000 for the calendar year of 1927. For various reasons it is believed that the loss of revenue for the fiscal year 1925-26/- will be only $208,000,000, and for 1926-27 only $307,000,000. So it is not believed the Treasury will face a deficit. The chief items which go to make up the grand reduction of 1926:

SOURCE.........................REDUCTION Income taxes.................$164,400,000 Estate tax.....................15,000,000 Gift tax........................2,000,000 Capital stock tax..............68,500,000 Cigars.........................17,000,000 Automobiles....................80,400,000 Jewelry.........................8,000,000 Admissions and dues.............1,250,000 Mah jong sets.......................1,000

*Last week a Federal judge in Manhattan declared the gift tax unconstitutional. The Government will appeal the case.

/-In 1925-26, for example, the first six months' revenue has already been collected under the old law.