Evening star., 1963-01-24

10000 4,124
their deductions but still bene-
fit overall from the reduced
rates and other relief measures.
2. SimpIificatiOn and Liberal
izatiOn Of the medical expense
Deduction. The medical expense
deduction allowed to taxpayers
who are under 65 years of age
is limited to medical expenses
in excess of 3 per cent of their
income. A separate floor Of l
per cent of income is applicable
to expenditures for drugs. .
Under this recommendation,
only those medical and drug
expense which together exceed
4 per cent Of income would be
deductible
To tighten the burdens Of our
older citizens, all taxpayers who
have reached the age of IS
should be relieved from the
present l per cent floor on
drug expenses. They are already
exempt from the 3 per cent
floor on medical expenses.
Under present law there is
also a maximum limit on medi-
cal deductions of $4,000 for a
single person and up to $40, 900
for a married couple I rec
ommend, therefore, that the
maximum limit be removed.
The net revenue changes as a
result of these recommended
tions for simplification would
involve an increase of $50 mil
lion.
3. Minor Casualty Losses. i.
1 recommend that cas-
ualty losses inter into the CAL
culation of itemized deductions
only to the extent that they
exceed 4 per cent of the tax
payers income. -. This rec
ommendation will increase an
nual tax receiptsby $50 million.
4. Unlimited Charitable De-
ductiOn. Contributions. d.
In substantially appreciated
stock or other property. .
Should be limited to the same
80 per cent deduction for char
liable contributions as everyone
else.
Repeal of the unlimited char
table deduction would mean an
annual revenue increase of $40
million.
S. Repeal of the Sick Pay Ex-
clusiOns The sick pay exclu-
sion Z. should be repealed.
This action would provide $11O
million per year in additional
revenue.
s. Exclusion Of Premiums on
Group Term Insurance. 4
recommend that the current
annual value to the employe Of
employer financed group term
life insurance protection be in
cluded in income, with an ex-
ception for the first $1,000 Of
coverage to correspond to the
present exclusion for uninsured
death benefits.
Revenues would be increased
by $50 million per year.
Z. Repeal of the Dividend
Credit and Exclusion. There is
now allowed as an exclusion
from income the first $50 of
dividends received from domes-
tic corporations, and in addi-
tion, a credit against tax equal
to 4 per cent Of such dividend
income in excess Of $50. I re-
peat the recommendation made
In my 1861 tax message that
these provisions be repealed.
3. Natural Resources. Un-
intended defects have arisen in
the application Of the special
tax privileges that Congress has
granted TO mineral industries.
the changes recommended
below will alleviate this situa-
tion and yield an additional
$500 million per year in reve-
nue..
ta) Carryover OF excess de-
ductions. Under present tax
law. mineral industries are per-
mitted TO deduct from taxable
income a depletion allowance
based on a percentage Of gross
mineral income but subject 10
a limit Of so per cent OF net
income from each producing
property.
The intent OF this net income
limit is not always realized,
however. because substantial
amounts OF development costs
and other expenses incurred
while the property Is being de-
veloped are not brought into
the net income limit for the pur-
pose OF computing the deple-
ton allowance, but are instead
charged off against income
from other sources. The result
Is that In many cases percent
age depletion far exceeds so per
cent OF net income earned over
the life Of the property. when
net income is properly defined
TO include development costs.
One method OF removing this
defect in present law would je
TO provide that amounts I'm ex-
cess OF gross income from the
mineral property, which are de-
Quoted against other income
OF the taxpayer, should be used
TO reduce the net income from
the property tfor purposes OF
computing percentage deple-
tom In later producing years.
These carryover amounts could
either be applied fully as the
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