Imperial Valley press. (El Centro, Calif.) 1907-current, 1933-12-15
INCOME TAX
ADJUSTMENT
ANTICIPATED
Morgenthau Recommends Slash
In Rate For Incomes Derived
From Earnings.
PRESENT LAW INEQUITABLE
Amount Of Reduction Held Up
Pending Decision On Amount
Of Government Budget.

WASHINGTON, Dec. Is. U.P) =
A lower federal tax Oh earned in
comes than on income from invest
ments was recommended today by
acting Secretary of Treasury Nor
gerthaf.
Appearing before the house ways
and means committee, Morgenthau
also urged abandonment Of the
present system OF permitting hus-
bands and wives to file separate in
come tax returns. Under existing
procedure some couples have been
able to pay smaller taxes than
would have been required under a
joint return.
The treasury head suggested otE-
or important changes in proposal OF
a ways and means subcommittee
designed to plug loopholes in the
present tax laws, raise new reVe-
nues and simplify the income tax
structure.
The sub committee had estimated
its proposed changes would yield
$270,O00000 of new revenue. Treas
ury experts, however, estimated the
gain at nearer $l00000,000.
Morgenthau made no specific
recommendations on the amount
of new tax rates and said ne would
not Ee able to do SO until federal
budget estimates are completed.
He agreed with tie committee,
however, that there should be only
one set OF normal tax rates instead
of two, and that surtax rates be
adjusted accordingly.
In addition TO the earned income
recommendations, the treasury
criticised the proposal to limit de-
probation deductions of corpora
tons to Is per cent of the amount
actually sustained. The treasury
recommended that provisions tor
discovery depletion" in connection
with mining enterprises be elimi-
mated n order to place all taXpay-
ers Oh the same basis.
Earning Capacity Less
cit has long been recognized
both in this country and abroad, y
Morgenthau said, in discussing the
income tax burden on small tax
payers, "that earned income should
be taxed at a lower rate than IN
come from investments.
1.-THE salaried man, unlike the
recipient of income from invest
ment, is under the necessity OF pro-
Viding for the gradual loss CT his
earning power by building up a
fund sufficient to care for his old
age, for sickness, and the care OF
his family during his old age and
after his death.
Gin consequence, his capacity to
pay income taxes is actually less
than that of a man with a similar
income from capital investments,
who is under no such necessity. For
these reasons and others, provision
was made in the revenue laws OF
1924, 1926 and 1928 for a credit
against the tax applicable to earned
income, but the provision was de-
leted in the 1882 law on account OF
the acute need for revenue.
"Since the burden of taxation
will necessarily be heavy during the
next few years, it is more essential
that the burden be distributed as
equitably as possible.
1.-The treasury, therefore, strongly
recommends that the principle of a
lower tax on earned income should
again be recognized at the same
time that the basic rates of tax are
adjusted. For simplicity in admin
istration, it is recommended that
the provision take the form of a
seduction of some agreed percent
age of the taxpayers earned in
come; and that it contain limita-
ton of the application of the sec
ton to incomes of not more than
$25, O0O."