Evening star., 1963-01-24

| AlOAhC pay 90 oOOAA no JIlC JdA
program is enacted and new
withholding rates 60 into ef-
feet, While tax rates are to be
reduced for every bracket, the
largest proportionate tax reduc-
ton properly goes to those at
the bottom Of the economic
ladder.
Accordingly, in addition to
lowering rates in the lower
brackets. l urge that the first
bracket be split into two groups,
so that married couples with
adjusted gross incomes" Of
$4,000 or less (or single per-
sons with $1,000 or less) re-
ceive a 80 per cent reduction in
their tax rate. Some one-third
Of all taxpayers are in this
group including many of
the very old and very young
whose earning powers arc be-
low average.
Middle and higher income
families are both consumers
and investors and the present
rates ranging up to 81 per cent
not only check consumption but
discourage investment, and en-
courage the diversion of funds
and effort into activities aimed
more at the avoidance of taxes
than the efficient production
Of goods. The highest rate
should not exceed 65 per cent,
a reduction of 20 per cent from
the present rate.
Businessmen and farmers :
everyone whose income depends
directly upon selling his prod
ucts or services to the public
will benefit from the increased
income and purchasing power
Of consumers and the substan-
tial reduction in taxes on prof.
its. =.
Small businessmen with net
income of less than $25,000-
who constitute over 100000 Of
the nations 585, 900 corpora
tions will, under this program,
receive greater reductions in
their corporation taxes than
their larger competitors. Under
my program, beginning this
year. the first $25 900 of corpo-
rate taxable income will be sub
ject to a tax rate of % per
cent rather than 80 per cent.
a reduction of almost 27 per
cent.
III. The tax program and the
Federal budget:
Within a few years of
the enactment Of this pro-
gram, federal revenues will be
larger than If present tax rates
continue to prevail AS the
economy climbs toward fui.. en-
ployment, a substantial part of
the increased tax revenue there
by generated will be applied to-
ward a reduction in the federal
deficit.
AS I have repeatedly empha-
sized, our choice today is not
between a tax cut and a bal
anced budget. Our choice is be-
tween chronic deficits resulting
from chronic slack, on the one
hand, and transitional deficits
temporarily enlarged by tax re-
vision designed to promote full
employment and thus make
possible an ultimately balanced
budget.
1t would be a grave mistake
to require that any tax reduc-
ton today be offset by a cor
respondig cut in expenditures.
The gains in demand from
tax reduction would then be
offset-or more than offset
by the loss Of demand due to
the reduction In government
spending. -.
On the other hand, I do not
favor raising demand by a mas
sive increase in Government ex-
penditures. This admins
tration is pledged to enforce
economy and efficiency in a
strict control of expenditures.
In short. this tax program
will increase our wealth far
more than 1t increases our pub
lie debt.
Nv. Requirements for effective
action and fiscal responsible
ity:
Fully recognizing that 1t is
both desirable and necessary
for the Congress to exercise it
own discretion in the actual
drafting Of a tax bill, I recon-
mend the application of the
following basic principles in this
vital task:
A. The entire tax revision
program should be promptly en-
acted as a single comprehensive
bill. While the full rate
reduction program must take
effect gradually for the reasons
stated below, l am proposing
that the individual tax rates
for 1868 income be reduced to
a range from 1875 per cent to
84.5 per cent. with a cut in the
Withholding rate from the pres
ent Is per cent to l5.5 per
cent becoming effective upon
enactment of the law.
This will increase the dis
posable income of consumers at
an annual rate Of nearly So bill
lion in the second half Of
1868. Also the rate of corporate
tax on the first $4,000 OF net
income would be reduced from
80 per cent to % per cent for
the year 1868. Equally impor-
tant is action in 1868 on the
additional individual and cor
porate rate reductions proposed
for 1864 and 1865.
b. The net amount OF tax
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