Taxes for Deficits

Last week President Hoover sent to Congress the budget for 1933. It made bad fiscal reading. For last year, this year and next year the President set forth the following figures (in millions of dollars) :

1931

Expenditures.......................... 4,091

Receipts................................. 3,189

Deficit ..................................... 902

1932

Expenditures............................ 4,361

Receipts................................... 2,239

Deficit....................................... 2,122

1933

Expenditures............................. 3,996

Receipts..................................... 2,576

Deficit......................................... 1,420

The deficits included payments on the public debt required by law. Thus the net operating deficit this year (1932) would be the total deficit (2,122 millions) less the statutory sinking fund payment (412 millions) or 1,711 millions which would represent the increase in the public debt.

The President had reduced 1933 estimates $365,000,000 below 1932 appropriations (major cuts: Farm Board. $100,000,000; Shipping Board, $36,000,000; drought loans and highway work, $49,000,000; Navy, $17,000,000; Army, $36,000,000). But economy was-not enough to balance the budget. President Hoover had to recommend tax-upping.

His purpose was to raise by new levies enough to meet the net operating deficit of 1933 and thus block an increase in the public debt. The sinking fund payment ($496,000,000) could be managed by public borrowing which would leave about $924,000,000 to come from new revenue. The President's recommendation: re-enactment for a two-year period of the 1924 tax law "with such changes as may be appropriate." Such a plan, the President estimated, would bring in $390.000,000 additional this fiscal year and $920,000,000 next.

The Hoover tax plan would raise the corporation tax from 12% to 12 1/2%. Among the new excise levies would be: automobiles, 5%; cameras, 10%; guns & ammunition, 10%; jewelry, 5%; amusement admissions (above 50-c-), 10%. On income taxes the comparative effect would be as follows:

Present law Proposed law

Single exemption $1,500 $1,000

Married exemption... 3,500 2,500

Normal tax on first

$4,000 of net income 1 1/2% 2%

Second $4,000 3% 4%

Balance 5% 6%

1% Surtax $ 10,500 $ 14,000

10% Surtax 40,000 34,000

15% Surtax 60,000 46,000

20% Surtax 100,000 or 58,000

over

25% Surtax 70,000

30% Surtax 84.000

35% Surtax 96.000

40% Surtax 500.000 or

over

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