Evening star., 1937-11-11
Morqenthau Address

MS bHeIe WOulQ De III NOt moving AT al.
Estimated Budgetary
Improvement Over $4,000, 900 900.
Relatively few persons realize the
striking fact that the net improvement
this year in the budgetary position
of the Federal Government as esti-
mated will amount to more than ST.
C00,000,000. In other words, the net
deficit this year is estimated at less
than 700,000,000, as compared with
more than 2.700,O00,0OO last year.
This net improvement of more than
$4,000, 100000 in single year pro-
vides the best answer to those who,
In most cases ignorant of the true
facts, have publicly despaired of our
ability to balance the Federal budget.
True, much Of this years anticipated
budgetary improvement comes frsm
increased revenue, but we are supple
menting this by also seeking reductions
in expenditures.
In addition to these considerations,
should like to point out that, as a
result Of the Social Security Act and
related State laws, it is estimated
that the Federal Government next
year will receive more than 81 ,000, ,000,-
900 net for investment in Govern
ment securities for the unemployment
trust fund and the old-age reserve
account. Although this investment
will not change the total amount of
the public debt, it will with balanced
budget result in the transfer to these
reserve accounts of more than a
81 ,000, 100000 of Government obliga-
tions now held by private investors.
Even during the decade of the
20s, when the Treasury was re-
ceiving large payments of interest and
principal on war debts, and from the
sale of surplus war materials, the
maximum reduction made in any single
year in the public debt held by private
investors was about one billion three
hundred millions. The rate at which
it is safe to reduce the public debt
in private hands depends uTon the
rate at which private funds flow into
investment channels. 1t is unsafe to
go too fast.
Earnest Consideration
Being Given Tax Structure.
Although we are not contemplat-
ing any increase in the total tax bur-
den, the character of our tax struc-
ture is being given earnest considera-
tion.
The Federal tax system affects
everyone in the country. We in the
Treasury in studying tax problems
have two objectives always before us:
First, that the tax burden shall be
distributed as fairly as possible, and
second, that the collection of take,
shall be as little burdensome to the
taxpayer as possible.
| 1t is with these aims that. bv di-
rection of the President. we have beer
reviewing the whole tax structure ir
the last few months and are Just now
in the process of presenting to a COM
mlttee of Congress the information
We have collected. The study has not
been directed toward raising additional
revenue. Instead, we have sought to
determine whether there are ineouali.
ties and injustices in the distribution
OF the tax burden and whether there
are some taxes whose cost of collec-
ton and whose burdensome effect out
weight the revenue gain. In addi-
ton, We want to simplify collection
and make the taxpayers record-keep-
ing less difficult.
We realize that our tax laws are
| TOO complicated; we want to make
them less SO. We realize that there
are inequities; We want to eliminate
as many of them as We can.
In making this study, we have in
vited the assistance and the advice
OF groups of taxpayers and of in
dividuals. We want to hear the tax
payers side of the story. We want
all the acts We can get and we have
obtained both facts and opinions.
Our tax revenues come largely from
individual earnings and business
profits. We do not wish to impose
levies which tend to dry up the
sources OF tax revenue. The laws
should be so written and administered
that the taxpayer can continue to
make reasonable profit with a
minimum of interference from his own
Federal Government; provided that
the taxpayer co-operates with his
Government in carrying out the pur-
pose and the spirit of the tax laws.
OF course, tax policy cannot properly
be determined from exceptional cases.
We must look at the whole picture.
We base our decisions on extensive
information and upon analysis of
actual tax records.
Br0adened Base for
Income Tax Seen More Just.
The amount of our income tax
revenue is only about half our totai
internal revenue. Less than 3.0O0,-
600 people out of our total popu-
lation pay individual Federal income
taxes. We would be applying the prin-
ciple of capacity to pay more justly
If we were to reduce the number
Of consumer taxes and at the same
time to increase the number of in
come taxpayers. Taxpayers who are
squarely confronted with their own
tax burdens are bound to be keenly
alive to the way the money is being
spent by their Government.
The budget, now nearing completion,
is predicated on a definite estimate
of receipts, based on the existing
tax structure. 1t is a cardinal noint