The Waterbury Democrat., 1941-08-08
Higher T axes Asked By Secretary Morgenthau
Wants Exemption in Personal Taxes to Be Cut Lower; "a Must Make Up Sum That Is Sought

curities.
 5. More revenue from estate and gift taxes.
 As part of his recommendation from lowering the personal exemp- tions, Morgenthau urged that the method of tax computation be sim- plified for new taxpayers with small incomes. This also corresponded to the Presidents recent sugges- tion.
 Outlining the present method of computing personal income taxes, Morgenthau remarked that small taxpayer might be full of patriotic enthusiasm when he started to fill out his return, but by the time he finished his figuring his cheerful ness may well have collapsed un- der the strain."
 Must Get Original Sum
 Pointing out that the tax bill as it passed the House will produce approximately $3,200, 900, 900 annual ly in additional revenue, MorgeTl- thau declared 1t was "very import ant that Che revenue yield be raised to at leastt he original 0,000,- GOO level.
 Tt is also important hat the bill be passed as promptly as possible, :" he said.
 Income taxpayers and excess rro- fits taxpayers should know as quick ly as possible what their taxes on 194l income and profits are going to be, since more than seven months of the year already have elapsed. The excise taxes and the estate tax cannot b imposed retroactively and every days delay in the passage of this tax bill costs the treasury several million dollars in revenue from those sources"
 He again urged that increased taxation be accompanied by maxi mum reductions in ordinary non- defense expenditures.
 Must Borrow Less
 Borrowing, he added, must be kept to a minimum to maintain the gov- ernment's fiscal strength.
 Increased taxation, he said, IS needed to maintain economic stabil- ity. Rising purchasing power, to- gether with restricted output ot non- defense goods, is causing tnnaaonary price rises which threaten to inc crease the cost of the defense pro- gram, he declared.
 Discussing the proposal to lower exemptions, he told the committee that it should not call on sacrifices from millions with low incomes un- less 1t reaches into other places with ability to pay. He asserted that the present excess profits tax ex- emptS profits of even the most proS- porous corporations except to the extent that such profits are in ex- cess of average profitS for the years l936-le39.
 Surely" he observed, Congress will not wish to impose additional taxes on millions more of our low income group, unless it also imposes the excess profits tax on the exempt excess profits of such corporations. :"
 Morgenthau'S plan for joint hus- band-Wife income tax returns con- formed to MT. RooSevelt'S recom- mendationS. It would permit a mar ried couple, both of whom are work ing to file separate returns on the earned portion of their incomes but require joint retutrns on that part of the income accruing from inter- est on securities, property, and other investments.
 The original house ways and means committee proposal would have required joint returns on all husband income, whether earn- ed in wages or derived from invest mentS. The house rejected the pro- poSal before passing the bill.
 Explains Joint Returns
 Discussing the necessity for joint returns, Morgenthau said that un- der the separate return plan fam lilies pay lower federal income taxes when both husband and wife re- ceive income than when the same total amount of income is received by only one of them.
 This Is a discrimination of which many wealthy people have taken ad- vantage by large gifts Of income producing property between hus- band and wife," the secretary said Furthermore, in at least eight states of the Union. federal income taxes are made substantially lower than in the remaining states be- cause the local law permits the split ting of income between the husbands and wives"
 He referred to the so-called coln- munity property states, where all income of husbands and wives whether earned by one or both, au- tomatically is divided between the two. Thus. a man earning $5.0OO g