Evening star., 1933-01-18

but including post once oencltl.
Interest or the public debt which
which cannot be educed-$725, 600 600.
..2-Trust funds. tax refunds, ID. =.
budget, contributions to the civil serv"
ice psnsions. post office subsidies to air
and foreign mail which are represented
by fixed obligations, and other similar
items on which there is no opportunity
to reduce-S310,9 100000.
"3-Public works and their mainte-
nance texcluding military, naval and
veterans construction which are in fol-
lowing itenls), has been reduced prac-
tically to commitments and to con-
tracts outstanding-$305, 100000.
"4-Expenditures on military estab-
lishments-$6l2,7 10000
"5-Expenditures on veterans have
been reduced in the executive proposals
by s121, 100000 S818. 100000
"6-All other expenditures of the
Government, including the legislative,
judiciary, law enforcement, prisons, for
eign affairs, fiscal and tax service, pub
lie health, education, forests, fisheries,
aids to agriculture, labor, commerce,
safety of life at sea. inspection OF food
products and a multitude of vital serv-
ices, including the post Office, as rep
resented by the remaining deficiencies,
and all other independent establish
ments except the Veterans Bureau,
S46l ,000,0 900.
- Total, s3,233, ,ooo,O
Sc Per Cent in Five Items.
1T will be seen that about Sc per
cent cf the whole expenditure of the
Government lies in the first five items.
mo matter how rigid economies may
be, 1t is obvious that the budget cannot
be balanced without a most substantial
increase in revenues But the progress
of appropriation bills, however would
indicate that the executive recon-
mendations on which all these calcu-
lations are based will not be realized
by 500 900, 900 or more, and therefore
it Is more likely that the deficit will
amount to from $500,000 900 to $780,
000,000
In canvassing the three major fields
of possible income, that is, income taxes
customs and excise taxes. believe that
inquiry by the Congress will develop
that income taxes under the act OF
1882 have been developed to the point
of maximum productivity unless we are
prepared to abandon our American sys-
tenn of fairly high exemptions and rea-
sonably low rates applicable TO the
smaller incomes and in any event by
keeping to these principles no further
burdens in this direction would sub
stantially increase revenues and solve
the questions. One of the first eco
nomic effects of the increases already
made is the retreat of capital into tax
exempt securities and the denudation
of industry and commerce of that much
available capital.
THE customs revenues and the mis-
cellaneous revenues are not likely to
be increased except through recovery
in trade In my view, therefore, the
field for substantial increase in Federal
Government revenues, resolves itself to
the exploration of possibilities of So
called excise or sales taxes In the
estimated revenues for the next fiscal
year. nearly s700,0000o is comprised
of so-called excise taxes which are
levied On few score different manu-
factured commodities.
These taxes are, in fact, manu-
turers' sales taxes. Any attempted dis
tinction between excise taxes on manu-
factured commodities. or sales taxes on
manufactured commodities. is mere
Juggling of words. OF the taxes now
levied nearly 5000, 1000, 600 are upon es-
sentials as distinguished from so called
non-essential5 The Congress has thus
already established a sales tax as a
basis for one-quarter of the whole pub
lie revenues and has already adopted
sales taxes upon essentials as dis
tinguished from non-essentials. To ex-
tend this form of taxation is neither
new nor revolutionary.
"Inctead of spreading 1t over a few
scores of commodities and services at
the regular rates. which cause discrim-
ination and hardships between indus
tries, it would seem the escence of good
craftsmanship to apply such tax gen.
orally at low rate upon all manufac-
lures except upon food and cheaper
grades of clothing and thereby give to
the Federal Government stable basis
of income during the period OF de-
preston.
"The balancing Of the budget is one
of the essential steps in strengthening
the foundations of recovery. Capital
are very important item
in our economic life. There can be no
doubt that there is an enormous ac-
cumulated demand for capital funds
that would be expended for equipment
and requirements of all kinds If long
time funds could be obtained cheaply
and If confidence were restored. For
some time now longtime funds have not
DSSH dFdlldUlc IOI tliC puOiS az ita-
sonable rates. The requirement of the
Federal Treasury from the market as
a constant borrower, the balancing OF
the Federal budget and the refunding
operations necessary to bring the Gov
ernment debt into better balance would
have a stimulating effect, would vital
ize our entire credit structure and pro-
duce one of the conditions essential to
continued recovery.
Would Refund Bonds.
1T is essential that the Government
funding of outstanding high interest
bearing Liberty bonds into bonds bear
ing lower rate of interest. 1t Is es-
sential. too, that portion of our short
term borrowing should be converted
into longer-term issues. A balanced
budget would greatly facilitate such an
operation.
Every principle of sound government
or management and wise economy
policy call for the prompt balancing
of the Federal budget This all-im-
portant objective is definitely within
reach, and more determined effort will
bring us to the goal we have been
striving to reach in the face of un-
paralleled difficulties.
One of the most helpful contribu-
tions which the Congress and this ad-
ministration could give to the next ad-
ministration would be to enable them
TO start with the Federal budget in
balance and the Federal finances in
order
Signed: HERBERT HOOVER"