Evening star., 1951-02-02

conclusive at the present time,
and I urge the Congress to con-
tinue to keep that goal before it.
, I believe that the wisest and
most practical approach to this
goal is to enact the tax program
; we need this year in two parts
rather than enacting the full tax
program all at once.
: Government expenditures will
be increasing very rapidly during
the next few months. We will
have to act fast if our revenues
are to keep pace with rising
expenditures.
I recommend that as rapidly as
possible the Congress enact reve-
nue. legislation to yield additional
taxes of at least 10 billion dollars
annually, and later in the year
enact the remaining amounts
needed to keep us on a pay-as-we-
60 basis.
Months For Observation.
If we follow this course, our
revenues will keep pace with in
creasing expenditures, and we
shall have some months in which
to observe economic developments
and to consider the several serious
questions that will need to be
resolved before all parts of this
years tax program are enacted.
For example, we will have better
information on exactly how much
we shall need to balance the
budget. AS I explained in the
Budget Message, our estimates of
military expenditures are still
tentative. In particular. the
amount we spend for military
equipment will depend on how fast
the production lines are geared up
and the equipment is actually
turned out. If our military pro-
duction program can be got under
way faster-as we hope it can
expenditures will, of course, be
larger than the budget estimates.
Moreover, the Congress has not
yet had an opportunity to act on
the budget. believe the Congress
will find that the budget is sound
and provides only for the essential
needs Of our Nation in this time of
world crisis. Nevertheless, the ap-
preparations actually enacted by
the Congress will, of course, con-
troll the actual expenditures.
Furthermore, the economic de-
velopments of the months ahead
the impact of the defense effort
and Of tighter controls on prices
and wages and prof1ts-should be
considered before the balance of
our tax program for the coming
fiscal year is completed.
$40 Billion to Be Raised Now.
These uncertainties, however,
do not affect our obvious need for
much larger taXes-and our need
for the bulk of them very soon.
I am therefore transmitting, for
the consideration of the Congress
at this time. my recommendations
as to the best way to raise at
least $40 billion now.
know the Congress will want
to consider these problems very
carefully. and to review my rec
concentrations in the light of
their own independent analysis.
The Secretary of the Treasury is
prepared to discuss these matters
in detail with the committees of
Congress.
1 believe we should meet our
immediate objective by increasing
existing taxes. The present Fed
eral tax structure, while marred
by imperfections, contains the
most equitable types of taxes we
have been able to devise. Under
these taxes. our economy has
demonstrated a surge in produc-
tive power to increasingly higher
levels.
1 recommend an immediate in
crease in personal income taxes
TO bring in 81 billion in additional
revenue.
Income Tax Major Source.
The personal income tax is the
malnstay of our Federal tax sys-
tenn. 1t should be the major
source Of the additional revenue
we need.
This is true because it is the
personal income tax that allows
US the greatest opportunity to be
talr. 1t Is the personal income
tax above all else which takes
account of differences in ability
to pay-both differences in income
and differences in family obliga-
tons. 1t allows an exemption of
$500 per person, and deductions for
charitable contributions, extraor-
oinary medical expenses and other
expenses as provided by law. Un-
der present law, a single person
earning a net income of $4,000
q year pays tax of about 16
per cent of his income, or $488,
while a married person with two
dependents and earning the same
net income pays per cent tax,
or $120. The average rate of tax
reaches so per cent at about the
s45 900 income level for a single
person and the 100000 income
level for family of four.
i In increasing the yield of the
personal income tax, every one
should realize that the higher
taxes cannot be limited to the
upper income groups. To obtain
revenue commensurate with our
defense expenditures, all taxpay-
, ers must contribute, because the
bulk of the income in this country
is received by presons whose in
comes are between $4,000 and
$4,000 a year. We should tax
| the upper income groups-and
: tax them heavily-but it will also
. be necessary to tax people with
moderate incomes.
Favors Retaining Exemption.