The Waterbury Democrat., 1938-04-25
PRESIDENT SENT NEW TAX PLAN
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Instead" he said, "a policy of re- ciprocal tax immunity was read into the 18th amendment. This re- suited in exempting the income from federal bonds from state tax ation and exempting the income from state bonds from federal tax ation."
 He said that neither the states nor the federal government derived any advantage from the reciprocal tax immunity.
 State, Federal EmplOyeS
 "A similar problem" he said, "is created by the exemption from state or federal taxation of a great army of state and federal officers and employees"
 To meet these problems, MT. Roosevelt recommended prompt &C., tion to terminate future tax-exemp- tions of federal, state and munich pal bonds and legislation to end tax exemption of governmental salaries.
 "The desirability of this recom- mendation has been apparent for some time," said the president, "but heretofore it has been assumed that the Congress was obliged to wait upon that cumbersome and uncer- tain remedy a constitutional amendment-before taking action.
 To-day, however, expressions in recent judicial opinions led us to hope that the assumptions under lying these doctrines are being questioned by the court itself and that these tax immunities are not memorable requirements under the constitution itself but are the re- suit of judicial decision.
 May Correct It
 Therefore, it is not unreasonable to hope that judicial decision may find it possible to correct 1t. The doctrine was originally evolved out of totally different set of econo- mic circumstances from those which now exist.
 Tt is familiar principle of law that decisions lose their binding force when the reasons supporting them no longer are pertinent"
 MT. Roosevelt noted that persons of large income invested heavily in tax exempt securities.
 Men with great means" he said, "best able to assume business risks, have been encouraged to lock up substantial portions of their funds in taX-eXempt securities. Men with little means who should be encour- aged to hold the secure obligations of the federal and state govern ments have been obliged to pay relatively higher price for those se- curities than the very rich because the tax-immunity is of much less value to them than to those whose incomes fall in the higher brackets" "
 Evils Reported 20 Years
 The president noted that for 20 years secretaries of the treasury have reported on "evils" of the tax exemption system and that econ- omists had declared the system in- consistent with a progressive tax system.
 T lay before Congress" said the president, "the statement that ldH dllu cllcCClVC p1o6i CoobFS III come tax and huge perpetual re- serve of tax-exempt bonds cannot exist side by side.
 "The ending of tax exemption, be it of government securities or of government salaries, is matter not of politics, but of principle.
 Such legislation can, l believe, be enacted by 8 short and simple sta- ute. It would subject all future state and local bonds to existing federal taxes; and it would confer similar powers on states in rela- tion to future federal issues.
 T recommend that the Congress enact legislation ending tax exemp- tion on government salaries of all kinds, conferring powers on the states with respect to federal salar- ies and powers to the federal gov- ernment with respect to state and local government salaries"