Evening star., 1947-06-16
Text of Tax Veto Message

eXpenQ1GufeS 1OT eSSeQttdl SOSclAs
ment operations are still high. We
are still meeting heavy obligations
growing out of the war. We continue
to be confronted with great response
bilities for international relief and
rehabilitation that have an Inn
portant bearing on our efforts to
secure lasting peace. We are still
in a transition period in which
many uncertainties continue. In
the face of these facts, common
prudence demands a realistic and
conservative management OF the
fiscal affairs OF the Government.
A time of high employment and
high prices, wages and profits, such
as the present, calls for surplus
in Government revenue over ex-
penditures and the application OF
all or much of this surplus to the
reduction Of the public debt. Con-
tinuing public confidence in Gov
ernment finances depends upon
such a policy. II the Government
does not reduce the public debt
during the most active and infla-
tionary periods, there is little pros
pect of material reduction at any
time, and the country would, as a
result, be in poorer position to
extend supports to the economy
should q subsequent defiationary
period develop.
Debt Reduction Important.
With the present huge public debt,
| it is of first Importance that every
effort now be made to reduce the
debt as much as possible. If H. r. l
were to become law, the amount
available for debt retirement would
be entirely too law for this period
of unparalleled high levels of peace
time income and employment.
The integrity of the public debt
Is the financial bedrock on which
our national economy rests. More
than half of the American people
are direct owners of Government
securities. A major portion of the
assets Of banks, insurance COM
panies and trust funds is invested
in Government bonds. To maintain
the integrity Of the public debt we
must now reduce 1t by substantial
amounts.
In addition to the fact that this
is not the time, for tax reduction,
there is a fundamental objection
to this particular bill. An adjust
ment of the tax system should pro-
vide fair and equitable relief for
individuals from the present tax
burden, but the reductions pro-
posed in H. r. / are neither fair
nor equitable. H. r. 1 reduces
taxes in the high income brackets
to a grossly disproportionate ex-
tent as compared to the reduction
in the low income brackets. A
good tax reduction bill would give
a greater proportion Of relief to
the low income group.
H. R. fails to give relief where
it Is needed most Under H. r. l.,
tax savings to the average family
with an income of $4,000 would be
less than $50, while taxes on an
income of $5O,0OO would be reduced
by nearly 5000 and on an income
of $500,000 by nearly 100000.
Thorough Revision Needed.
In so far as "take-home" pay Is
concerned under H. r. l, the family
earning $4,000 would receive an
increase of only IL per cent the
family with an income of $50,000
would receive an increase of 1876
per cent, and the family with an
income of $500, 900 would receive an
increase of 623 per cent.
If H. r. l we're to become law,
the inequity of its provisions would
be frozen into the tax structure.
The reduction in Government re-
ceipts resulting from this bill would
be such that the Government could
ill afford to make fair tax reduc-
tions at the proper time in the form
of a carefully considered revision
of our entire tax structure.
Now is the time to plan for a
thorough-going revision of the tax
system. We should consider not
only individual income tax rates,
but also the level OF personal ex-
emptions and many other adjust
ments in the personal inc me tax
structure. We should also consider
changes in excise tax laws, gift and
estate taxes, corporation taxes, and,
in fact, the entire field of tax rev.
enues. Such program of tax ad-
justment and tax reduction should
be geared to the financial and eco
nomic needs of this country. 1t
will be an important contribution
to economic progress. The timing
of such a program is highly impor-
tant to achieve economic stability,
to promote the investment Of cap
ital and to maintain employment,
purchasing power and high levels Of
production.
For the compelling reasons I have
set forth, return H. r. without
my approval.
HARRY S. TRUMAN.
- VIEaUI lI1