Monday, Aug. 11, 1941

"My Dear Bob:--"

The salutation was a mite too bland. The letter itself reminded North Carolina's hot-tempered, 77-year-old Representative Robert Lee ("Muley") Doughton, Chairman of the Ways & Means Committee, of a kick in the pants. For three months he had sweated over the biggest tax bill of all time, conferring with Treasury officials, arguing behind locked doors with fainthearted committeemen. For a week he had fought hard to get the bill through the House intact. Now, on the eve of passage, came the President's letter.

Plucked Goose. The President had three bones to pick with the tax bill. The first was over the controversial question of compulsory joint returns for husbands & wives (TIME, July 21, et seq.). Said Franklin Roosevelt, somewhat ambiguously: "The Treasury Department does not approve of mandatory joint tax returns except on the condition of granting substantial relief to earned income of the husband and wife. In this I heartily concur."

On the question of excess-profits taxes, the President was more severe. He wanted the Treasury's original proposal for a tax based exclusively on the rate of return on invested capital, instead of letting corporations base their tax exemptions on average earnings from 1936 to 1939 (TIME, June 30).

Finally, Franklin Roosevelt thought exemptions for income taxpayers ought to be lowered. Said he: "Very few tax experts agree with me, but I still think that some way ought to be found. . . . Most Americans . . . are willing and proud to chip in directly even if their individual contributions are very small. . . ."

When the President finished with the 1941 tax bill, it was a plucked goose. To have followed his recommendations would have meant sending the bill back to the committee, more weeks of wrangling and study before it came out on the floor of the House again. Meanwhile, time was slipping by, and the Government was losing $2,500,000 a day in new excise taxes, which can be collected as soon as the bill is signed.

"Greatly Surprised." Muley Doughton hit the ceiling. Red-faced and bitter, he called his committee together for a showdown. "This is a terrible hurt," said old Bob Doughton. "This is one of the hardest blows I have ever had." Then, his mountaineer anger getting the better of him, he told the committee flatly that he didn't intend to stand for it.

After 90 minutes of acrimonious debate, Doughton called for a vote on each of the propositions in the President's letter. One by one, the committee knocked them over.

Back to his office went Muley Doughton to answer the President's letter.

"I was very greatly surprised," wrote Mountaineer Doughton, "to receive your letter. . . . The matters discussed . . . have all received our most careful consideration. ... As to mandatory joint returns . . . our whole desire was to place the family upon an equitable basis . . . and remove the admitted evil of tax avoidance. . . ."

As to excess profits: "I feel that no one would be inclined to favor . . . the company which by chance was incorporated in a year of high values. . . . Or to conclude that the present shareholders of a corporation have realized an excess profit on what the original shareholders paid for their stock. Or not to give recognition to factors of personal efficiency. . . ."

His heaviest shot: "The Treasury representatives . . . were strenuously opposed to any reduction in personal exemptions, citing the rising cost of living and the burden of hidden taxes. ... I am surprised to learn that your views are antagonistic to those expressed so emphatically by the Treasury. . . ."

Of this correspondence with the President, Bob Doughton ordered 100 mimeographed copies, gleefully distributed them to reporters. Said he: "You think it's a pretty good letter, hey, boys? Well, you can have all the copies you want. Take some to your friends."

Blitzkrieg. As Franklin Roosevelt this week boarded the Presidential yacht Potomac for a cruise, he had no more to say about the tax bill. He left it in the trembling hands of Congress.

Only one of the President's points on which a fight was expected in the House was the committee proposal to make joint returns mandatory. Congressmen feared its impact on the women's vote, thought wives might imagine that it somehow abridged their rights. When they marshaled their forces in the House this week, they obliterated the joint-returns proposal like a Panzer division going through a troop of Girl Scouts. They did not even stop to fill the $323,000,000 gap where joint returns had been. Instead, they rolled on, passed the rest of the bill as it stood, left the mopping up to the Senate.

This file is automatically generated by a robot program, so reader's discretion is required.