Evening star., 1950-01-23

be obtained without impairing tn,
private initiative and enterpris,
essential to continued economic
growth.
We should always keep in mine
that the maintenance of a souns
fiscal position on the part of tn,
Government is a long range mat
ter. Nothing could be more fool
hardy than to attempt to brins
about balanced budget in 1875.
by measures that would make i
impossible to maintain a balanced
budget in the following years.
Third. as to changes in the ta2
laws.
/ If, over the next few years, we
hold expenditures to the mini
mum necessary levels and at the
same time follow policies which
contribute to stable economic
growth, we can look forward to
steady progress toward a balanced
budget. Nevertheless, we should
not rely only upon budgetary
economy and upon economic ex-
pansion to produce a balanced
budget. We should accelerate the
attainment of this objective by
changes in the tax laws. Drastic
increases in tax rates, just as in
the case of drastic cuts in essen
tial expenditures, might prove to
be self-defeating. Our primary
objective should be to improve and
strengthen our revenue system foI
the long run.
Under these circumstances,
am now recommending number
of important revisions in oul
present tax system. to reduce
present inequities. to stimulate
business activity. and to yielo
about one billion dollars in net
additional revenue.
Outlines Major Principles.
In making changes in the ta1
laws, we should be sure they move
toward, and not away from, the
major principles of a good tax sys.
tenn. Our tax structure should
recognize differences in ability tt
pay; it should provide incentive.
to new undertakings and the ex.
pansion of existing businesses; Il
should support the objective Of in
creasing opportunities for all oul
citizens to obtain better standard
of living; and it should rigidly ex.
clude unfairness or favoritism.
Over the years, we have made
important progress in building q
good tax system. However, much
remains to be done. There is
need further to improve the dis
tribution of the tax load to make
it conform better with tax paying
ability. There is need to reduce
taxes which burden consumption
and handicap particular busi-
nesses. Moreover, we should elm
mate tax loopholes which enable
some few to escape their share Of
the cost of Government at the
expense of the rest of the Amer
lean people.
Many of the important and de-
sirable tax revisions which should
be- made must be postponed un-
til the budget situation improves
Nevertheless. a number Of those
steps can and should be taken
now.
First, recommend that excise
taxes be- reduced 'to ~tAe~extent
and only to the extent,y that the
resulting loss ia rrevenhe is re-
placed by revenue obtained from
closing loopholes in the present
tax laws.
Sees Need to Cut Excises.
The excise taxes are still at
substantially their wartime levels
Some are depressing certain lines
of business. Some burden con-
sumption and fall with particular
weight on low-income groups
Still others add to the cost OF
living by increasing business costs
Since we are limited in the
amount of reduction we can now
afford, we should choose for re-
duction those taxes which have
the most undesirable effects. ]
believe that reductions are most
urgently needed in the excise
taxes on transportation of prop
erty, transportation of persons,
long distance telephone and tele-
graph communications, and the
entire group of retail excises, in
cluding such items as toilet prep
arations. luggage and handbags.
II these revisions are made. we
will have reduced the most serious
inequities of our present excise
taxes. We should go further just as
quickly as budgetary conditions
permit. At present, however, we
should reduce excises only to the
extent that the loss in revenue
can be recouped by eliminating the
tax loopholes which now permit
some groups. to escape their fan
share of taxation.
The continued escape of privi-
legged groups from taxation violates
the fundamental democratic prin.
ciple of fair treatment for all, ane
undermines public confidence ir
the tax system. While few Of these
loopholes' by themselves involve
major revenue losses, collectivel,
they result in the loss of many
hundreds of millions of dollar,
every year.
Cites Oil and Mine Exemptions.
I wish to call the attention O
the Congress to the more i'm.
portant of these loopholes. Will,
some of them are of long stand
ing, their injustice has been ag.
gravated as the taxes assesset
against the rest of the population
have been increased. A tax con.
cession to a favored few is alway:
unfair, but it becomes a gros.
injustice against the rest of tht
population when tax rates are