Evening star., 1936-08-20
BIGGER TAX YIELD
SEEN|MPERATNE
Secretary Morgenthau's 0p.
timism Held Without
Sound Foundation.
gr ecial Dispatch to The Star

NEW YORK, August 20.-Those
who have made close study Of the
detailed United States Treasury
statements as they come along from
month to month are at loss to ex-
plain the optimism of Secretary Nor
genthau concerning future taxation.
While it is true that the deficit in
the first six weeks of the new fiscal
year is only about one-third as large
as in the corresponding period of
1885, its size Is impressive enough to
render imperative continued taxation
at the present rate. And, If the cur
rent debt of about $4,000, 100000 is
to be reduced to an appreciable extent
during this decade, more taxes, rather
than less, will have to be imposed on
the American people.
While the corporation tax bill was
being debated in Congress last
Spring, several attempts were made to
introduce a section that would have
raised the surtax rate and lowered
personal income tax exemptions.
There was substantial support to this
proposal. But it failed for political
reasons.
Politics Interfered.
Neither the administration leaders
nor members of Congress dared to go
before the country next November as
advocates of a measure that would
have placed several million persons
on the Federal tax rolls who never
before had paid a cent to the direct
support of the Government:
The argument of those who have all
along opposed a change in the rate
and exemption of the individual in
come taxpayer is that the results
would not justify the labor of its COL
lection or the feeling aroused among
those whom it affected. However,
studies made by tax experts show
that a reduction in personal exemp-
tions to $4,000 from S2.500 for heads
of families, and a minimum of $500
for single persons, along with an in
crease in the normal rate from to
6 per cent, with the SurtaX applicable
at $4,000 rather than at $4,000 and
going to 10 per cent at $4,000, would
realize new taxes of about $3.50, ,000,-
900 year. This seems worth going
after.
If, at the same time, there could be
thorough overhauling Of the tax
system and of its application. cutting
out many of the exemptions now per-
mitted, it might be possible to bring
the new collections to a much larger
sum.
100000 Exempt.
There are today roughly 5000, 900
persons IN the employ of States and
their political subdivisions from whom
the United States Government collects
nothing Among this number are
thousands, especially in the public
school system. who receive much
larger salaries than those now OBJ
tained by the individual subject to
the smallest normal tax. Public
opinion is steadily becoming aroused
over this situation. 1t, however, can
not be corrected except by new laws.
About one-seventh of the total in
ternal revenue taxes for the fiscal year
ending June 30. 1896, were derived
from liquor. Secretary Morgenthau
is on record to the effect that this
class Of taxes will not be reduced.
Since 1888, revenue collections
from corporations have increased
about so per cent; those from individ-
uals around so per cent. The new tax
imposed by the last Congress, together
with larger business profits. will make
the spread between these two tax
groups still wider.
Copyright, 1850