Evening star., 1935-01-07
DEFICIT Of NEARLY
J BILLIONS SEEN
Morgenthau Makes Es-
innate for Fiscal Year in
Report to Congress.
BY the Associated Press.

Federal spending at the rate Of
$685., 100000 a month during the first
six months of 1885, resulting in cur
rent fiscal year deficit of $4,869.418,-
338 and a gross debt peak of $751;
086, ,633 ,874. was forecast todav by Sec
retary Morgenthau in the TreaSurys
annual report to Congress.
1t estimated that expenditures for
the year would be s8,581 ,069 ,026, in
Guiding S4,644,6l3852 for relief, off,
set by receipts Of s3.711, ,65O.688
The predicted deficit would be S4,-
033, ,492, ,460 in excess of the actual
deficit at the end of the last fiscal
year, on June 80, 1894.
The Secretary foresaw a continu-
ance of heavy operating losses due to
emergency expenditures. He eStl-
mated that the Treasury would go
further into debt during the fiscal
year 1886, when expenditures would
amount to s8,52O,413,609, offset in
part by receipts of 1891 904,639. re-
sulting in q deficit of S4.528, ,500,97O
and swelling the gross public debt to
$34,238,82 ,656.
expenditure items in 1886 was fore
cast. but an expected outlay Of s3,-
goo. 900. 900 for relief of unemploy-
ment" would bring the total of such
expenditures TO 4.122,0ll ATS, or only
half billion less than expected In
the present fiscal period.
Sees More Tax Income.
The Secretary found a cheering pos
sibility in the estimate that income
taxes in the fiscal year 1886 would
improve by Sl37 600, 900 over 1885
and amount TO sl,l88,000 900. This,
he said, would reflect the further
gains because Of the moderately higher
incomes anticipat ted for the calendar
years 1884 and 1885"
Morgenthau pointed out that in
view Of the nature OF the Federal tax
structure, it was not to be expected
that revenues would reflect promptly
an anticipated improvement in busi-
ness conditions.
For example" he said, collections
Of income taxes during the latter half
Of the fiscal year 1895 will be based
on the business volume Of the calen-
dar year 1884, and income tax collec-
tions during the fiscal year 1886 will
be based On the volume of business
of the calendar years 1884 and 1885.
Therefore. it is anticipated that
the rising level of business activity
will increase income tax receipts only
moderately during the remainder Of
the fiscal year 1885 and the fiscal
year 1886. Certain miscellaneous in
ternal revenue receipts, notably estate
and gift taxes, show lag in tax COL
lections behind changes in general
business conditions"
Total receipts from customs duties
and internal revenue, excluding agri-
cultural adjustment taxes, are esti-
mated at S3,l72 100000 for the new
fiscal year beginning next July l, If
the temporary taxes expiring June
80 and July 81. 1885. are extended"
This figure represents an increase OF
$277, 100000 over the estimated re-
ceiptS in the present fiscal year, and
of SSH 100000 over the actual re-
ceipts in the fiscal year 1884.
Estimates Decline.
Morgenthau said that failure to eX-
tend the temporary taxes would re-
duce the total internal revenue re-
ceiptS by about S378,0O0, 900 and GUS
toms by about s11 100000 to a total
of S2,783 100000, or Sll2,000000 less
than estimated receipts from these
sources in the fiscal year 1885.
The Secretary said he expected
current corporation income taxes to
yield $509,000,000 in the fiscal year
1886, an increase of S69,000,000 over
the expected return for the present
fiscal period, and current indivldal
income taxes $500, 100000, or an in
crease of S62 100000 over the 1885
estimate Collections Of back taxes
on incomes are expected to bring in
S173 900 900, an increase of $4,000, 900.
Morgenthau said the increase in in
come tax receipts for the present
fiscal year over last would result from
the higher level Of corporate earnings.
the elimination of consolidated re-
turns, the Treasury administration Of
depreciation allowances and changes
in the individual income rate struc-
ture and in the capital gains and
losses provisions.
Total miscellaneous internal reve-
nue. receipts-assuming extension of
temporary taxes now due to expire
next Summer-are estimated at ST.
686, 100000. an increase of $l29,000,-
900 over the estimate for the fiscal
year 1885.
Estate tax and gift tax collections
are estimated to yield Sl91 900 900
and $25,000,000, respectively, repre-
senting increases of $54000,000 and
$14,000,000. Revenues from distilled
spirits and wines and from fermented
liquors are estimated to show in
creases of SGT 100000 and $11, 900 900.
respectively, partly in consequence
of the anticipated higher level of in
comes and partly because of the ris-
ing trend in the domestic manufac-
ture and consumption Of distilled
spirits and wines.
Repeal of the tax on checks, effec-
tive as of January !, 1885, will clip
S24 100000 from the 1896 revenue.
The Secretary said customs re-
ceipts in 1886 were estimated at $685.
100000. an increase of $11,000,00O,
assuming that temporary duties on
certain commodities (coal, lumber,
petroleum products, copper and prod
uctS) are extended" Decreases from
this source are expected in collec-
tions from Cuban sugar imports and
imported liquor.
Agricultural adjustment tax receipts
were estimated at $4,000, 900. "on
the assumption that it would be nec-
essary to continue the work of the
Agricultural Adjustment Administra-
ton on practically the same basis as
during the fiscal year 1885"