Evening star., 1939-05-27
Tax Revision to Aid Business and Remove
'Irritonts' Advocted by Morgenthou

developments present the danger
that they may involve us in in
creased cost for national defense
here and that may result in none
tary instability abroad and disrup-
ton of our commerce, the conse-
quences of which we cannot fully
predict.
No proper solution of any major
problem facing this Government to-
day can be achieved without full
consideration of the impact on our
country OF the present international
crisis.
THE unmistakable implications of
the international situation is that we
should give serious attention to our
future fiscal position and redouble
our efforts to attain full recovery.
High national income and q sound
fiscal position are essential to ade-
quate national defense. 1t is against
this background that we re-examine
our fiscal program.
"A fundamental objective of sound
finance clearly is a balanced budget.
There Is, of course, no good reason
why taxes must exactly balance ex-
penditures in each specific year any
more than in each month, each week
or each day. There are periods dur
ing which sound fiscal policy calls
for an excess of outgo over income,
and others when it calls for an ex-
cess of income over outgo.
In a depression it is inevitable
that there will be deficits. Rev
enues decline at the same time
that the Federal Government is
called upon to assume inescapable
social and economic burdens.
Fears Continued Deficits.
IF, however, deficits are too long
continued the Oppressive effects of
uncertainty tend to make recovery
more difficult. The sequel to def
icits In emergencies should be sur
pluses during years of prosperity.
That was and is one of the broad
purposes OF seeking to raise the
national income to a high level,
thus assuring revenue great enough
not only to end the deficits which
began in 1881 but also to reduce the
public debt
In carrying out our fiscal policy
it would be helpful to have, ma
chinery which would more fully CO.
ordinate our efforts. 1t is not the
prerogative Of any administrative
department to make suggestions to
the legislative branch of the Gov
ernment for the conduct of its work
but 1 am sure that you would wish
me to be frank in suggesting ways
of Surmounting difficulties which l
believe now attend the joint efforts
of the Ways and Means and
Finance Committees and the Treas
ury Department.
IF, for instance. the Ways and
Means and Appropriation Commit
tee OF this House and the Finance
and Appropriations Committees of
the Senate could meet each session
as one joint committee on fiscal pol
icy, to consider the overall aspects
OF the expenditures and revenue pro-
grams, simplification and greater
effectiveness would result.
The Budget Act of 1921 set up a
procedure for the orderly formula =
ton by the Executive of fiscal pro-
poSals and for their submission to
Jhe Congress as unified budget. No
comparable procedure has been set
up in Congress for considering rev.
enues and expenditures together as
two interrelated aspects of a single
problem.
I hope this committee will agree
with me that some such innovation
would improve the efficiency of the
Government. BY providing for a
preliminary legislative consideration
| Of the overall picture of appropria-
ton and revenue measures, it would
give Congress broad perspective OF
the state of the Governments S
finances and permit a better-o ordered
coordination between the executive
and the legislative branches in this
field.
Lens for Viewing Needs.
This joint committee would In
effect be lens through which all
appropriation and revenue measures
could be viewed in relationship both
to what the Nation needs and to
what the Nation can afford.
This committee should have con-
tlnuous life for the purpose of
actively studying fiscal problems be-
tween, as we'll as during, sessions of
Congress. The Treasury Depart
ment would, of course, cooperate in
this work to the full extent that the
committee desired.
Thus. far, have dealt with the
financial problems of the Federal
Government alone. We must re-
member, however, that with the best
conceivable Federal fiscal plan in
operation. we still would have
touched less than half of the tax
problem which confronts the Ma
tion. Almost go per cent of the total
tax revenues of the country are COL
lected by State and local govern
mentS.
I'm the last five years, we have
given serious study to the problems
created by Federal-State tax con-
flicts. The same problems had been
recognized by our predecessors. 1t
is my belief that we should take
steps without delay to make these
studies effective.
Il suggest that Congress create
small temporary national commits
sion to report to Congress as soon
as feasible on the various aspects
OF intergovernmental fiscal policy
and propose plan for the solution
Of the problems involved. Such
commission should be made up of
men of ability who command the
highest possible public confidence,
who are familiar with fiscal prob
lens, but who will represent the
public at large rather than par
ticular governmental units.
Overlapping and competing taxes
have grown in number and size as
both Federal and State governments
have sought new revenue. Grants
in-aid are being demanded of the