Evening star., 1963-01-24

capital gains proposals would
be to raise revenues 500 mil
lion. The President said an
additional $700 million would
result from the expected in
creasing volume of buying and
selling, which would be subject
to taxation on capital gains.
Depletion - The President
proposed no change. pending
further study, in depletion al
lowance rates for mineral in
dustrieS, but recommended
tighter rules for their ap-
plication.
An oil company, now may
deduct from taxable income
27.5 per cent of gross income
from a well. This deduction Is
subject to a limit of so per cent
Of net income. For example, q
well may produce $500 worth
of oil in a year. The depletion
allowance permits deduction OF
27.5 per cent Of this amount
or $4l2.50-from taxable in
come. But If expenses total
$500, net income is only $500,
The so per cent ceiling limits
the depletion allowance to $3.50,
Sees $500 Million Revenues
Treasury officials said the
changes proposed by the Pres
ident would be equivalent to
reducing the depletion rate by
between 20 and IS per cent.
They estimated the changes
would raise $500 million Of
revenue.
ElderIy-The President rec
commended repeal Of the extra
5000 personal exemption now
allowed for persons over SIS
years old, and proposed more
liberal tax breaks costing $500
million of revenues.
He, proposed to allow all
those over IS to subtract $500
from their taxes. This change
and related provisions, he said,
would exempt from taxation
single persons with income be-
low $4,000 and married couples
below $500. Under present
law. single persons over 65 can
be taxed If income is as low as
1888, and the cutoff for
married couples is $2,667.
Elderly persons would not
have to file tax returns unless
they earned at least 81 300, UP
from the present $1,000.
MiScellaneOus-The law now
allows, subject to limits, deduc-
ton Of expenses incurred for
care of children while the
mother is at work. The ceiling
on this deduction is a flat $500.
The President proposed to al
low deductions of child-care
expenses up to $500 for one
child. 5000 for two children
and $1,000 for three children.
This and other changes would
reduce revenues $40 million.
Urges Liberalization
Authors, athletes and others
frequently earn very large sums
in one year and little or Moth
ing in other years. To save
these persons from getting into
very high tax brackets, the law
now permits averaging of in
come over several years. The
President proposed to liberalize
and unity the averaging system
at a revenue cost of $50 million.
Employees who must move to
a different town to work for
the same employer now exclude
from taxable income the NOV
ing expenses for which they are
reimbursed. Mr.. Kennedy rec
commended extension Of the
same privilege to new employees,
at a cost of $40 million.
Deductions for charitable
contributions now are allowed
/ UP to 20 per cent Of income.
plus an extra 10 per cent for
contributions to churches, edu-
cational institutions and medi-
cal facilities. The President
proposed extension Of the extra
10 per cent to all publicly sup
ported and controlled chari-
table organizations, such as
community chests and cultural
centers. He said the cost would
be minor.
Businesses now may deduct
expenses for research and ex-
perimentation during the year
when the money is spent, but
must spread the cost Of de-
preciable machinery and equip
ment over its life. Mr.. Ken
nedy said machinery and
equipment should be made
eligible for deduction in a single
year, at a revenue loss Of $50
million.
4 Per Cent Floor
Taxpayers now may deduct
medical expenses only to the
extent that they exceed 3 per
cent Of income, and drugs over
/ per cent. The President rec
commended a 4 per cent floor
for combined medical and drug
expenses. He also proposed
elimination Of the ceilings on
medical deductions Of $4,000
for a single person and $4,000
for married couples. Liberaliza-
ton In this area would be Off
set by unspecified tighter rules.
so the Government would pick
up $50 million.
Casualty losses for damages
to autos, houses and other
property now is fully deduct