Evening star., 1950-01-24
The Tax MESSAGE

The Tax Message
Although Congress on close inspection
undoubtedly will find reason to balk at
some of them, the Presidents tax recon-
mendations for fiscal 1851 seem sound In
principle and moderate in scope. Ger
tainly, measured against his views of last
January, when he called for $4,000, 600, 900
in new levies, they represent marked
shift toward conservatism, at least as far
not surprising in an election year when
nothing could be more unpopular than
taxation.
Thus, repeatedly emphasizing the need
to encourage private initiative by avoiding
incentive e-destroying excesses, he has
limited his proposals to relatively modest
request for revisions ito improve the fair
ness of the tax system, to bring in some
additional revenue, and to strengthen our
economy. To that end, he has asked
specifically for substantial cut in excise
taxes, for the elimination of loopholes in
the present laws, and for legislation to
provide 81 ,000, ,000, 900 in additional revenue
from taxation on estates, gifts and cor
porations.
In recommending a reduction in excises
however the President has been emphatic
in declaring that he will not approve
cut unless the resulting loss of revenue
is replaced by revenue realized from closed
loopholes. In other words, strongly sug-
gesting that he will resort to a veto other
wise, he has fixed it as an essential con-
dition that If Congress lowers or ends the
excise tax on items like transportation,
long distance telephone calls, toilet prep
arations, handbags, luggage, etc. 1t must
at the same time provide that the hun
dreds OF millions of dollars thus lost will
be recouped by tightening up the laws to
stop such things as Cd excessive exemp-
tlons enjoyed by oil and mining interests,
10 the misuse, in some instances, of edu-
cational and charitable organizations to
enable certain businesses to escape taxa
ton and gain an unfair advantage over
competitors, CD inequitable relief accorded
LIE insurance companies, and "a use of
legal devices-notably in the. case of the
movie NEUTRALITY-SUSPICIOUS. individuals to
pay the lower tax on capital gains instead
OF the higher tax on ordinary income.
The President has cited a number of
examples to back up his argument. If
tney are typical, then he has certainly
made strong case for an about attack
on the loopholes
As for his recommendation to raise an
additional 81 ,0oo, ,O00, 900 in revenue, there is
much reason to question the soundness of
MS proposal to impose moderate" tax
increase on corporation incomes in excess
of $4,000. Hardly challengeable, however.
are his suggestions for a substantial cut
in the current high taxation on corporate
income ranging from $25 900 to $50 900 and
Tor legal changes to encourage American
investment abroad. Similarly, he seems to
have firm basis for his views on estate
and gift taxes. He looks to such taxes to
provide a large part Of the extra revenue
ne mas requested, and he has offered good
argument-with impressive Illustrations
Tor revising them In way that will make
them yield considerably more than they
are yielding now.
indeed, everything considered, the Presi-
dents message is generally persuasive and
reassurlng as far as taxation itself is con-
cerned. The most dubious thing about II
Is what 1T has to say about the deficit
financing that will put the Nation more
than $5,o0o,o00,ooo in the red In fiscal 1851.
While paying lip service to the idea of
rigid economy 1t nowhere offers any indi-
cation OF just when, where or how the
administration is going to start keeping
outgo in line with income. All 1t does is
mold out vague hope that there will he
balanced budget in the bye-and-bye.
Needless to say, the hope will remain un-
1uinlled as long as our spending policy
lacks the kind restraint that characterizes
the taxing program now before Congress.
The White House seeks eight automo-
biles with roofs high enough to accommo-
date the top hats of foreign enyoys" The