Evening star., 1939-05-16
Brown Discusses
Reciprocal Taxes
In Radio Forum
Half Billion of Income
Seen for Government
In Outstanding Securities

IN OutStonoIn9 SeCurltleS
Senator Prentiss M. Brown Of
Michigan, chairman of the Special
Committee op Taxation of Govern
ment Securities, discussed PRO
posed Reciprocal Taxation of Gov
ernment Securities" last night in
the National Radio Forum, arranged
by The Star and broadcast over a
Nationwide network of the National
Broadcasting Co. The text of his
address follows:
The primary task of covering by
taxation the expenditures of the
Government of the United States
fails upon the Finance Committee
of the Senate and the Ways and
Means Committee of the House of
Representatives. Those members
of the Senate and House who are
charged with the responsibility for
governmental aid for agriculture,
for those on relief, for military and
naval preparation, and for the va
rious other expenditures of the
Government have more pleasant
task than those of us in the Con-
gress who are charged with the re-
sponsibility for raising the money.
Theirs is to grant and to give; ours
to find means to pay the bills and
the only way to do it is to tax the
public. After some years of ex-
perience as a member of the FL
nance Committee of the Senate. I
wonder why Senators serve on this
committee, why we undertake this
unpleasant responsibility. 1t is
much easier to give Government
money than to take it from the gen.
eral public.
In the last official statement of
the public debt of the United
States it appears that on January
81, 1899, the total debt of the United
States was almost forty billion and
the net debt was thirty-seven billion
dollars. This is exclusive of guar
anteed obligations such as the Fed
eral farm mortgage bonds, the Fed
eral Housing Administration LA
bility, Home Owners Loan Corp.
bonds and others of a similar
character, amounting to four billion,
three hundred million dollars, as
shown by the statement referred to.
1t is amazing how many people
seem to think that we have assets in
gold stored in Kentucky amounting
to almost sixteen billions of dollars
to balance against this total. This
view is entirely erroneous. The
Government of the United States
owns very little of this gold Over
ten billion of the total held is
owned ultimately by the depositors
in banks in the Federal Reserve
System. In other words, his ten
billion dollars represents the de-
posits of the general public of the
United States in Federal Reserve
banks. Almost three billion more
is owned in the form of gold certifi-
Gates by various corporations and
individuals, mainly foreigners who
have the right to own such certifi-
Gates. The Government owns ap-
proximately two and one-half bill
lion, of which the major part is in
the stabilization fund. This bal
ance in the Governments favor is
taken into consideration in reach
ing the total net debt 1 above stated
of approximately thirty-seven bill
lions of dollars, which is the actual
present outstanding direct obliga-
ton of the Federal Government.
This is, of course, the largest amount
of money that was ever owed by the
Federal Government. In a country
the size of ours. considering this as
the debt of the individuals who
make up the United States, it,
while large, is not, comparatively
speaking, on par with the debts
of other major nations. Nor is it
one which the Government cannot
eventually pay. 1t is, in round fig
ures, about three-fifths of the pres
ent annual income of the United
States; it is about one-half of the
eighty billion dollar yearly income
that we confidently believe our peo-
pie will obtain when conditions are
normal. 1t is mainly due to the
tremendous financial outpourings of
the World War period and those
necessary to bridge the people over
the great depression of the late 2Os
and the 30s.
Requirement of Taxation.
This situation requires on the part
OF those charged with the tax-levy-
ing authority, system of taxation
that is Cd fair and equitable as
between citizens and ca sufficient
to eventually meet these obligations
while carrying the Governments
current operating expenses. 1t is,
therefore, our duty to see that citi-
zens from whom so much is ex-
pected by way of tax levies should
be treated justly as between them
selves. To this end the President
in April of 1888 proposed that the
reciprocal exemption from income
taxation which had been granted
to public officials of National, State
and local governments should be
ended; and that the exemption
which had been granted to holders
of public securities should likewise
be ended. Happily the result desired
in respect to public salaries has
been achieved. Now, the Public
Salary Tax Act, which was passed
by the Congress and signed by the
President on April IL and which I
had the honor to sponsor in the
Senate, requires every public official,
be he President of the United States
or the Mayor of a city, a member
of the United States Senate or a
member of the State Legislature, a
judge of the Federal Court or a
Judge of State or municipal court,
to make the same income tax con-
tribution as do citizens in private
employment. 1t should be remem-
bered in this connection that all
Federal officials except judges ap-
pointed before 1882 have paid a
Federal income tax, and State off,
cials have paid State income tax.
The proposal we have is to apply