Evening star., 1947-08-23
The Political Mill
Congress Expected to Get
Tax Cut Bill in January

uxAut Dill IN J0nu0ry
Truman's Prediction of Five Billion
Surplus Sure to Bring @. o. P. Action
By Gould Lincoln
President Truman's recent midyear review
of the Federal budget-predcting surplus Of
nearly $5,000,000,000 at the close of the fiscal
year next June 30-has given tremendous inn
petus to the demand for a reduction in our
present wartime taxes. The prediction Is freely
made here, by high ranking Republican legis.
lators, that, notwithstanding earlier statements
by Speaker Martin and Chairman Harold
Knutson of the House Ways and Means Com
mittee that the next move on tax reduction
must come from, President Truman a new
Republican tax reduction bill will be submitted
to Congress soon after it meets in January
They add that the measure undoubtedly will
be passed.
The last fiscal year, ending June 80 of this
year, showed surplus of about $500 900 900.
If the Presidents estimates for the present
year work out-and there is good cause to
believe they Wilt will be the second year Of
a balanced budget and surplus. Under these
conditions, the Republicans insist, the Amer
ican people-now called on to relieve the rest
OF the World-are entitled to some measure
OF relief themselves in the form of reduced
taxes. Furthermore, If they are to continue
pouring out billions of dollars and to imple-
ment the so-called Marshall plan for the
rehabilitation of Europe, it would be wise
psychologlcally to give them a bit of relief.
Otherwise, public opinion might harden in
this country against the huge outlays which
are expected to be proposed under the Mar
shall plan.
Truman's Argument.
The President in his review of the budget
gave no hope of tax reduction certainly not
until 1949 He did lay great stress, however,
on the advantage of having huge surplus
to meet demands for European aid and to
pay off part Of the public debt.
1t is argued by the Truman administration
that the time to pay off the public debt is
when money is plentiful-and cheap. This
may be good from the point of view of the
Government-but not so good from that Of
the Americans who contributed their dollars
to buy war bonds. They bought those bonds
with dollars worth 10 or 80 cents-and they
are to be paid of with dollars worth so per
cent, or perhaps only 40 per cent. The Hitler
government in Germany paid off its internal
Indebtedness with marks that were worth
nearly nothing-but it paid off.
Advocates of tax reduction among the
Republcans say that there should be fixed
minimum sum for debt retirement to be PAID
each wear, The Senate Republicans at the
last session set 81, 600 100000 as the proper
figure for debt retirement per annum. Either
this figure or another, they insist, should ne
adopted. The American people should have
the benefit, in tax reduction, of anything oTer
In this way. part of the debt retirement would
be made with cheap dollars and part With
dollars of greater value, depending on c7n-
ditions in the country, but all would not be
paid with inflated money.
One of the matters which will have to be
determined is whether the bill now bling
framed by the Ways and Means Committee OF
the House to revamp the entire tax structure
is also to include tax reduction proVlGlons.
The revampng bill will be ready for intro
duction soon after Congress meets in January.
if present plans materialize. If it is decided,
as in the past, to separate tax reduction from
the tax structure measure then new, separate
bill for tax reduction may be expected, whether
the President makes any recommendation Tor
tax reduction or not. Republicans are again
convinced that they should not relinquish the
leadership in tax reduction to the Democratic
President.
Problems Outlined.
Among the problems which must be tackled
in these tax bills or tax bill, Is the part that
excise taxes shall play. Another is the So
called community property principle as applied
to the payment Of income taxes. third Is
relationship Of family in gift and inheritance
taxes. The demand for extending to taxpayers
in all states the community property principle
which now operates only in nine or ten COM
munity property stateS-wlll force, beyond
doubt, favorable action. Under this principle
Of community property, husbands and wives
may divide their total income, for the purpose
of paying taxes, thereby reducing greatly tfeir
surtax payments. This operates where the
total income is derived by the husband or by
the wife, or in any intermediate ratio.
The Truman budget review followed the
line taken by prominent Democratic members
of Congress, who rejoiced that the Republican
Congress had been unable to make as great
reduction in Government appropriations and r.
expenditures as the Republicans had promised.
The President could only see savings OF
81 500 900 900 below his budget, in the matter OF
appropriations, and he predicted that IN the
end the saving in expenditures would be only
about $500,000,000.
Just why the President and his followers
should believe that the American people will
be pleased because there has not been greater
economy it is difficult to under :
stand Their attitude leaves the impression
that Mr. Truman and the Democrats generally
approve of big spending of public funds; that
it is some kind of crime for Republicans to
cut governmental expenses and expenditures.
In this era of high taxes this is not politically
wise attitude on the part of the administration.
Questions and Answers