Evening star., 1941-08-03
Doughton''s S Answer
Neither Defense
Nor Apology
Presidents Suggestions
DeeisiveIy Rejected
By Committee
BY the Associated Press.

~ SSttItiNtSS
By the Associated Press.
FOLLOWING is the tert OF cor
respondence betWeen President
Roosevelt and Chairman Dough-
ton of the House Ways and
Means Committee oper the Pres
idents suggestions for revision
OF the tar bill:
July 81, 1941.
My Dear Bob:
Because of some uncertainties
which seem to have developed in
regard to the position of the
Treasury Department in regard
to some provisions in the tax bill
as reported out by the Ways and
Means Committee, asked the
Treasury Department for a clari-
flying letter, and I think it is only
fair to send this to you. I en-
close a copy of Secretary Nor
genthau's letter to me and also
an appendix showing examples of
corporations which would largely
escape excess profits taxes under
the bill.
I am sure that I make it clear
the Treasury Department does
not approve of mandatory joint
tax returns except on the condi-
tion of granting substantial re-
lief to earned income of the hus-
band and wife. In this I heart
lily concur. But the committee
draft leaves out the proviso alto
gether.
Discrimination Seen.
You and Jere Cooper Repre-
sentative Cooper of Tennessee)
have talked over the problem of
the excess profits tax in its re-
lationship to the omission in the
bill of application of this tax to
certain types of corporations.
These corporations may be max
ing 20 or 30 or so per cent on their
equity capital.
1t is my definite opinion that
they ought to contribute to the
cost Of our great defense pro-
gram far more heavily this year
than last year or the year before.
But just because they happened
to have made equally large
profits in recent years, they are
called on to contribute no more
to the national defense under the
proposed bill than they did be-
fore. That seems to me clearly a
discrimination in their favor.
There is one other subject
which did not have a chance
to talk with you about. 1t re-
lates to lowering the exemptions
in the lower brackets. I know
that very few tax experts agree
with me but I still think that
some way ought to be found by
which the exemption of single
person should be reduced to
$750.O0. with provision for a
straight simple payment OF some
small contribution to the ma
ional tax income through some
simple agency and on some SIM
pie form.
In the same way I think that
the married exemption should be
reduced to 100000, again with
q simple method of paying the
tax through simple agency and
on a simple form.
Direct Taxes Preferable.
Further, I am convinced that
the overwhelming majority OF
our citizens want to contribute
something directly to our defense
and that most of them would
rather do it with their eyes open
than do it through a general
sales tax or through multiplica-
ton of what we have known as
nuisance taxes"
In other words, most Amerl-
cans who are in the lowest in
come brackets are willing and
proud to chip in directly even II
their individual contributions
are very small in terms of dollars.
After all, the majority OF all
Americans are in these lowest
brackets.
One other thought. Perhaps
your committee will think 1T
worth while to study the filing OF
low-income returns through the
machinery of the post offices. This
will undoubtedly save good deal
of the cost of collection under
the present system. These SIM
ple returns could be sworn to
before the local postmaster, who,
of course, would have to be au-
thorized to administer the neces-
sary oath.
Very sincerely yours,
FRANKLIN D. ROOSEVELT.
FOLLOWING is the letter from
Secretary Morgenthdu to
Dhich the President referred:
July 81, 1941.
Nv Dear Mr.. President:
You have asked me to indicate
the position taken by the Treas
ury Department during the con-
sideration of the present tax bill
with regard to Cd the mandatory
ioint tax returns provision. and
(2) the excess profits tax provi-
sion.
1. Mandatory joint tax returns.
The Treasury indicated to the
Ways and Means Committee its
conditional approval of manda-
tory joint tax returns, the condl-
ton being that substantial relief
is simultaneously granted to
earned income of both husband
and wife. No substantial relle1
is afforded by the provisions OF
the pending bill from the result
ing increased tax in those cases
where husband and wife con-
tribute through their labor to
the family income. Therefore, In
this important respect the pend
ing bill is inconsistent with the
Treasury's suggestion.
In Excess of Reasonable Return.
2. Excess profits tax. The
Treasury has consistently ad-
hered to the position that the
excess profits tax should apply
to profits in excess of reason
able return on invested capital.