Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-10-05
INCOME TAX LAW
REWS|ONS STUDIED
Officials to Decide Whether
Increases Will Be Asked
of Congress.
Rv the Associated Press.

BY the Associated Press.
Burdened by declining Government
revenues and the urgent need Of raising
mere money, administration officials are
studying closely the many revisions OF
the income tax law. which have mar
rowed its application to comparatively
few persons.
Among these officials including PreSl-
dent Hoover will be evolved soon now
the administrators attitude toward the
Governments fiscal course in 1888. Ihey
will decide whether tax increases Will be
recommended to Congress.
Into their survey, the first quarter OF
the 1882 fiscal year has brought It's
compiled tionS with a 1914 100000 drop
in the TreaSury'S income
OF this decrease, S240 .543 267 was due
to falling income tax payments, which
amounted to only S267,257,654, as COM
pared with $498,520.395 in the same
quarter Of the previous ycaT During
the calendar year these have dWlndled
until officials forcSee that more revenue
must be obtained from some source.
Deficit of Last Year.
At the end of the first quarter last
year the Government had surplus OF
$50. go. but finished the year with a
deficit of S903, 100000 For the present
year it ended the first quarter with a
deficit of $3.50, 495, 85A. and indications
pointing to greater deficit.
Meanwhile, Representative La Guar
dia has proposed increasing Federal
income S750000 900 annually by im%
posing taxes on products Of new indus
tries and raising assessments on large
incomes
The New York Republican drafted
his plan at the request of both Repub-
liCan and Democratic independents in
the House and it will be considered by
them at a meeting before Congress
ConveneS
He estimated the increase in income
and inheritance taxes would net about
$500 000,0
The administration has given no hint
of what plans it has in view for meet
ing the situation. However, as the
sources from which its income is chief
~ derived seemed to have been wiped
out during the last and present years
it was regarded as doubtful that the
Treasury would recommend continu-
ance of the policy of borrowing to meet
expenses with little hope of Increased
revenue in the next two years This
situation seemed to- indicate that Con-
greSs must be asked to devise means Of
increasing the Governments revenue to
point where it could balance its
budget. Officials have said that they
wished to avoid any increase ia taxes
at this time if possible.
Various Plans Considered.
Various plans for increasing the Gov
eminent revenue through additional
taxes have been considered. Nothing
has been accepted as final. however
though both Secretary Mellon and Un'
dersecretary Mills in speeches have
pointed out that the income tax law!
have been narrowed to such an extern
that they produce but little revenue
Some change in this law was regarded
as probable, with many members o
Congress having already announced
they would ask an increase in the upper
Brackets of the tax.
Others have pointed out that since
1921 the number of persons making in
come-tax returns has been decreased
from more than 100000 to 100000
Of the latter number, about 100000 pa.
81 per cent of the total income ia!
collected by the Government.
UnderSecretary Mills called attention
to the limited base of the income-taI
system in a speech last May, in which
he said that successive reVisionS of thu
law increasing personal exemptions anc
credits had greatly narrowed the in
come-taX base and placed that tax upor
a comparatively small number OF per-
sons
In 1926 Congress increased the credit
for married taxpayers from $500 to
$500 and in one stroke wiped off the
income tax lists about 100000 tax
payers Of the persons who pay income
tax the $50 900 who make up the 81
per cent of the total derived their in
come chiefly from stock transactions
and dealings in bends. AS this sort OF
business was the first to react to the
depression. that source of income has
been virtually destroyed.
Possible Revenue Sources
While the Government could increase
its income by decreasing the eXemp-
tons allowed under the income tax
laws and setting a higher rate upon
the upper bracket OF income taxpayers
it hardly would be sufficient to meet
its needs and other sources would have
to be included to raise the needed
money
A sales tax plan advocated by Sen
ator Reed of Pennsylvania met prompt
rejection in administration circles. II
was regarded as likely that any plan
finally selected would include both re-
visions upward of the income tax laws
and an excise tax which would furnish
a more dependable base for income than
the system based almost entirely upon
profits made in stock and bond trans
actions.