When Luxuries Become Necessities

The House of Representatives might have been debating the merits of apple pie for all the opposition that was voiced. Before the House was President Johnson's proposed $4.8 billion excise-tax cut, and House leaders had set aside five hours one day last week for pro and con on the bill. But there was so little con that the debate lasted barely three hours, after which the House passed the bill by a vote of 401 to 6.* As whooshed through by the House, the bill would repeal "luxury" taxes in three stages over four years. The first reduction, amounting to $1.7 billion and to become effective July 1, would repeal the 10% retail tax on jewelry, furs, cosmetics and other toiletries, lug gage, handbags and other leather goods, as well as the 10% manufacturer's tax on business machines, sporting goods, phonograph records, musical instru ments, television sets, radios and phono graphs, refrigerators, freezers, electric, gas and oil appliances, pens and me chanical pencils, lighters, matches and playing cards. In addition, the 10% manufacturer's tax on new passenger cars would be cut to 7% , retroactive to May 15, with full repeal effective on Jan. 1, 1969. The 10% manufacturer's tax on air conditioners would be fully repealed, also retroactive to May 15.

A Hodgepodge of Taxes. The second stage, also amounting to $1.7 billion, would come by Jan. 1, 1966 when the 10% tax on local and long-distance telephone and Teletype services would be reduced to 3%; the 8% to 20% taxes now charged on general admissions, race tracks, cabarets, club dues, electric light bulbs and parts and accessories for passenger cars would be repealed altogether.

The final reduction of about $1.4 billion would occur gradually between Jan. 1, 1966 and Jan. 1, 1969, and would result in the repeal of the already reduced excise levies on cars and telephone and Teletype service.

As floor manager for the bill, Arkansas Democrat Wilbur Mills, chairm'an of the House Ways and Means Committee, explained that of the four types of excise taxes now in effect--user taxes (gasoline, airline tickets), regulatory (opium, betting, machine guns), sumptuary (alcohol, tobacco), and selective, or so-called luxury--only the luxury tax would be affected. Said he: "The excise taxes which this bill repeals were initially levied as emergency revenue-raising measures at the time of the Korean War, World War II, or at the time of the Depression of the 1930s. As a result, they represent a hodgepodge of taxes not developed on any systematic basis."

Almost Indistinguishable. Mills noted that "it sometimes is suggested that the present selective excise taxes are justified on the grounds that they are imposed on the sale of luxuries as contrasted with necessities. But in our society today it has become almost impossible to distinguish between luxuries and necessities."

Last week the Congress also: -- Approved, in the Senate, a bill authorizing $5.2 billion for the National Aeronautics and Space Administration program in 1966, including $242 million to carry forward the Gemini program and $2.97 billion for the Apollo man-on-the-moon program. The bill now goes to a Senate-House conference committee for adjustment of relatively minor dollar differences. >Passed, in the House, a $2.08 billion appropriations bill providing 1966 operating funds for several federal departments and agencies. About $82 million less than the President requested, the bill provides $388 million for the State Department, $370 million for the Justice Department, $889 million for the Commerce Department, $81 million for federal courts, and $171 million for the U.S. Information Agency. -- Approved, in the Senate, a resolution to permit Years of Lightning, Day of Drums, a U.S. Information Agency film on the life of President Kennedy, to be shown at the 25th reunion of Kennedy's Harvard class next week. Congressional approval is required for USIA films to be shown in the U.S.

* The six: Republicans John F. Baldwin of California and Robert P. Griffin of Michigan, Democrats Charles S. Joelson of New Jersey, Paul C. Jones of Missouri, John O. Marsh Jr. and Howard W. Smith of Virginia.

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