Evening star., 1940-06-30
Cost|iest Fiscal Year
In Peacetime History
Starts Tomorrow
Expenditures Moy Pass
$l0,500, ,000, 900, Leaving
$4,000, 900, 900 Deficit
BY the Associated Press.

%@FSVSFSSSFSSS SEitSh
BY the Associated Press.
The Government chalking up a
deficit Of $3,700, 100000, will end one
fiscal year today and start on new
one which, as a result of the new
defense program, will be the costliest
in peacetime history.
The expiring fiscal year produced
a new spending record of about So
600,000,000 Revenue totaled about
$500, ,000,0 900, leaving a deficit eX-
ceeded in peacetime only in 1886,
when the soldiers bonus was paid.
exact figures on income and outgo
will not be known until the middle
of this week after year-end reports
are received from field offces)
At present, Treasury officials are
figuring on expenditures of approx
imately s10,50O 100000 and income
of about $7,000,000,0O0 in the new
year. If these estimates hold good,
the deficit will be about $4,000, ,000,-
600, because the Treasury is figuring
on getting about $700, 100000 from
which have been instructed to turn
back part of their capital.
May Exceed 10 Billion.
There is every prospect. however,
that expenditures will be far greater
than $40 $500, 100000. President Roose-
welt has disclosed that expansion
of the rearmament program is under
consideration. He mentioned no fig
ures, but authoritative quarters said
this might involve a $4,000, 100000
outlay.
At the turn of the fiscal year the
Treasury owed about $43, 900, 900 900
and had less than $2000,000,000 of
its statutory borrowing authority
left. But the new defense program
carried with it $4,000,000,000 more
borrowing power.
Transition of the budget from a
peacetime to preparedness status
was marked in many items In the
old year, the Treasury spent s1,575,-
100000 for defense. In the new
year, the bill will approximate
S3,6OO.o0o00o Appropriations for
next year are much larger. but much
of the work won't be paid for until
the fiscal year beginning July !,
1941.
Last year, w. P. A. and other work
relief cost s1,840,0 100000. Next year
1t is expected to fall to 81 400, 900 900.
Small reductions will be made in
costs of other non-defense activities.
Larger Tax Yields Expected.
The larger revenue estimates are
due partly to anticipation of great
er yield from old taxes, on account
of expected better business, and
partly from the new defense taxes
Just enacted. The old taxes are ex-
pected to produce about $685. 900 900
more than they did last year, while
the new levies are figured at $7l5,-
100000.
The new taxes are expected to
bring in 1894, 300, 900 a year in the
following four years. The first
years revenue from these levies will
be less because persons who pay
their income taxes in quarterly in
stallments won't pay their third
and fourth installments on 1910 i'm
come until the 1942 fiscal year (be-
binning July l, 194D.
The new tax law provides for in
creases of 10 to so per cent in excise
levies (taxes of cigarettes, gasoline,
etc., 10 per cent in estate and gift
taxes, 10 per cent in individual in
come taxes, 16.1 to 18 per cent in
corporate ton taxes and decrease of
20 per cent in basic income tax ex-
emptionS.
The decrease in income tax ex-
emptions, from $4,000 to $4,000 for
married couples and from $1,000 to
$500 for single persons, is expected
to add 100000 income taxpayers
to Government rolls.
The estate and gift taxes went
into effect last Tuesday, when Pres
ident Roosevelt signed the tax bill.
Excise taxes are effective tomor-
row, and income taxes will be pay
able on 1910 income.
Gasoline Tax Increased.
An additional l per barrel on
beer will add a third of cent per-
bottle; an extra rs cents per gal
lon on liquor will add 10 cents per
quart, and 25 cents more on each
1000 cigarettes will add half cent
to each standard package of 20.
TIL gasoline tax will jump from
to IL cents; radios, from 3 to
51a per cent of their value; passen-
ger cars, from to 31a per cent, and
so on for 30-odd other items.
Amusement admission taxes will
begin at 81 cents instead of Al. The
scale of l cent for each 10 cents
of admission price will continue.
A total of 100000 new income
taxpayers will join the 100000 to
whom the Government already
sends please remit" notices every
March Is. They will be made sub
ject to tax on their 1910 incomes
as a result of lowering the personal
exemptions of married persons from
$4,000 to $4,000 and of single per-
sons from ST 900 to $500.
In addition, super r-tax" of 10
per cent of the normal income tax is