Evening star. [volume] (Washington, D.C.) 1854-1972, 1926-06-22

STAR, WASHINGTON
theory that reduction Of tax rates
economically applied will stimulate
business. and thereby increase taxable
revenue. is being demonstrated. To
what point further reduction may be
carried cannot be stated until the
new tax law has had sufficient oppor-
tunity to become fully effective and
experience has shown what revenue
it will produce.
Surplus Is Estimated.
The question is on the lips of many
as to whether there is prospect of
another tax reduction in the near
future. ] think the answer to this
question should be delayed until we
know definitely the revenue.producing
ability of the present revenue act. The
estimate today is that we will close
the current fiscal year with a surplus
Of about $500 100000. This cannot
be safely considered as an indication
of what revenue the present law will
give. Our revenue this year from
income and profits tax includes about
$3.50 ,000, 900 of back taxes. most of
which accrued in years prior to 1920.
We do not anticipate such accrual Of
back taxes in the future. Rather will
they materially diminish and reach an
estimated total Of only about $780,
600 900 in 1928
1t would be unfortunate to raise
hopes of further tax relief until we
are sure that the state of our finances
juStitieS 1t. There Is no such. surety
today. Business was quick to antici
pate the last tax reduction. 1t was
justified in so doing. To raise such
hopes at this time might be to encour-
age business to anticipate again, as 1t
did in 1925. further tax reduction
This might have a detrimental effect
upon the sterilization of the country
under the present tax law.
You have your appropriations for
the next fiscal year. l have previ-
ously stated our effort must be not to
increase expenditures over what they
will be for the current year. Rather
do the latest estimates for next year
indicate that It may be possible to
spend less than in 1926. The survey
which has been made Of our require
ments indicates the possibility Of
reaching a minimum of $500. 900 900
in our expenditures next year. This
will be our objective. For the coming
fiscal year the estimates indicate that
we will have a margin of $lS5 600. 900
of revenues over expenditures II the
latter do not exceed the figure | have
stated. A surplus OF only SlS5. 900 600
in a business involving. an annual ex-
penditure in excess of three and one
half billions OF dollars is far from be-
ing a safe margin.
Depends on Prosperity
This margin could be easily dissi.
pated by falling off Of our antici-
pated income. The revenue estimate
Is necessarily based on the present
prosperous condition Of the country.
Any change unfavorable To this con
dition would he reflected In lessened
income. But l look to you to see that
the margin is not threatened BY any
increase in our estimated eXpendl-
lures. Further expansion of the bust
ness of Government which would add
to our costs should await a. better es-
innate of our future income.
We are approaching the time for
consideration of the estimates of ap-
preparations for the fiscal year 1928.
I have expressed to the director Of
the Bureau of the Budget the hope
that these estimates can be kept with
In A limit Of $4,000. 600 900 exclusive
Of the Postal Service and tax refunds.
1t may become imperative before the
budget Is finally completed substan-
TALLY to reduce that figure. This will
depend entirely upon our revenue out
look for 1928. concerning which we
will have better information a few
months hence. | say to you frankly
that the outlook today is not enCour
aging. We know our public debt and
or har oh 10
A preliminary but very exhaustive
estimate of our other requiremen Mt 8
compared with an estimate of the ex-
pected revenue for that year indicates
a surplus OF only $40 600. 900, which is
negligible and may easily be converted
into a deficit. This is the dark side of
the picture. but II lends weight to the
views / have previously expressed
with regard to further tax reduction.
1t also emphasizes the need for the ut
most care in the scrutiny OF your 1928
requirements. If | have occasionally
had to give warning as to the posi-
bility of a deficit, it has served to our
advantage. When we face the future
too sanguine as to available funds we
court disaster II the prophecy be err
roneous. We face no such disaster If
we err on the other side and view with
Speaks About Personnel.
I have spoken to you often on the
subject of personnel. Our salary and
wage expenditure is the most costly
single item of the budget. While the
Post Office Department has necessarily
had to increase its personnel with its
growth Of business We have been de-
creasing personnel elsewhere. 1t Is
very easy to have too many people on
the pay roll. The reductions which
have been made in personnel show no
detrimental effect upon our results
Rather has it seemed to improve the
efficiency Of the service. l am encour-
aged in the thought that we can have
further reduction of personnel without
discharging a single person. by the
simple device Of not filing all the
vacancies that occur. This would not
operate in the summary separation Of
any one from the Federal service. Gen
Lord will outline to you a plan to
carry this into effect, which has my
approval.
No doubt what has been accom-
plished by the Federal Government
has served as an inspiration to some
local political units in reducing their
governmental costs, but 1t is not dis
closed by the aggregate for all Of them.
From 1921 to 1925 the Federal Govern
ment reduced expenditures more than
two billions of dollars. The same
period showed an Increase Of moro