Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-05-21
MILLS HINTS WAR
TAX CUT TOO SOON
Mutual Savings Bankers
Given Picture of Reasons
Behind Deficit of Treasury.
CONTINUED From First Page

sharply to a peak either during or
shortly after the period of war activity.
Subsequently expenditures decline, but
not to the pre-war level. owing partly
to continuing expenditures due to war
activities. such as the service on the
public debt, OUTLAWS for military estab-
lishments on an increased scale and the
care Of war veterans. Also expansion Ia
the civil functions OF tbs Governing
!s accelerated curing Nar pe-=cSs. az
compared With the gradual Increase =
Norma reg ..t!Zce.
VA Ss'k~ cerm2n.nt Gx'r
'"Eae slgnihcznt TACT TO be noted IS
that each war marks the beginning OF
a. permanently higher basis Of cxpendi-
lures, even >after the. war and early
postwar peaks have been passed.
"Our present situation raises the
question, though it does not do more
than raise the question, as to whether
some of the taxes developed in the war
period have been repealed or modified
perhaps g. little too rapidly. Through
successive revisions in the income tax
laws, personal exemptions and credits
have been increased, and the income
base, which bears the major direct bur-
den of the individual income taxes, has
been greatly narrowed"
temporary tax reductions since the
World War period and the removal of
numerous miscellaneous taxes as well
as the large reduction in the national
debt. Mills said that the income tax
furnished two-thirds Of the Govern
ment's revenues.
Wide Fluctuations Possible.
The fact that we rely for two-thirds
Of our tax revenue on the income tax
and that that income tax Is so con-
structed as to be extremely sensitive"
he continued makes our whole revenue
system susceptible to very wide fiuctua-
tons. following in the main the curve
Of business peaks and depressions."
Noting that expenditures we're ex-
ceeding revenues by . vide margin,
Mills said
This would be a. matter of very
grave concern we're IT, not for the fact
that conditions are so abnormal that
they do not furnish any fair test Of
the adequacy Of A. revenue system On
the one hand, expenditures are swelled
by emergency needs, and on the other
hand. revenues are depressed way be-
low the normal point.
we should so adjust our tax system
that year In and year out there viii be
no great variation between receipts and
expenditures, and that a comparatively
small deficit one year will be Offset by
a comparatively small surplus the next, ;"
he said.
Two steps Needed.
The Undersecretary said the estab-
lishmeDt OF such a system demands in
the first place the determination, after
eliminating the unusual items that now
distort. the picture, of what normal ex-
penditureS are likely to be for the next
inevitable upward trend"
The second essential STEP" he con-
tinued, rs 10 ascertain whether our
present tax system, once business con-
ditions have returned to normal will
receipts. The second problem Is OBJ
viously an enormously difhcult one
under existing conditions. and while
the Treasury Department Is endeavor-
ing 10 formulate some reasonable sat-
isfactory answer, our final conclusion
should be based on further trial and
experience, Certainly the present year
taken by itself offers a most inadequate
criterion by which TO Judge the ability
Of the present Federal revenue system
to meet the Governments normal re-
quirements."
Educators Address.
DIR. Payson Smith. commissioner Of
education In Massachusetts. was the
second speaker on todayis program, the
noted educator urging a Nationwide
campaign among Young people on the
handling and meaning of money Speak