Errors Corrected

The U.S. Government last week corrected two errors. The Senate followed the House in repealing Sections 452 and 462 of the 1954 tax law, better known as "Humphrey's Bloopers." The two sections, sponsored by Treasury Secretary George Humphrey, had allowed corporations to postpone paying taxes on prepaid income or reserves needed for future expenses until they were actually used, and to defer taxes on income paid in advance for services or rents (TIME, April 4). The Treasury reckoned that the immediate drop in 1955 revenues would run a mere $50 million. Instead, revenue began dropping at the rate of nearly $1 billion a year, as corporations postponed paying taxes on reserves for vacation pay, pensions, maintenance and repairs. Now, after the House approves the Senate version, businessmen will have to recompute the taxes on their 1954 income, put in the deferred taxes, and pay up the difference by Dec. 15, 1955.

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