As a result of economy of administration by the Executive and of
appropriation by the Congress, the end of this fiscal year will leave a
surplus in the Treasury estimated at $383,000,000. Unless otherwise
ordered, such surplus is used for the retirement of the war debt. A bond
which can be retired today for 100 cents will cost the people 104 1/4
cents to retire a year from now. While I favor a speedy reduction of the
debt as already required by law and in accordance with the promises made to
the holders of our Liberty bonds when they were issued, there is no reason
why a balanced portion of surplus revenue should not be applied to a
reduction of taxation. It can not be repeated too often that the enormous
revenues of this Nation could not be collected without becoming a charge on
all the people whether or not they directly pay taxes. Everyone who is
paying or the bare necessities of fool and shelter and clothing, without
considering the better things of life, is indirectly paying a national tax.
The nearly 20,000,000 owners of securities, the additional scores of
millions of holders of insurance policies and depositors in savings banks,
are all paying a national tax. Millions of individuals and corporations are
making a direct contribution to the National Treasury which runs from 11/2
to 25 per cent of their income, besides a number of special requirements,
like automobile and admission taxes. Whenever the state of the Treasury
will permit, I believe in a reduction of taxation. I think the taxpayers
are entitled to it. But I am not advocating tax reduction merely for the
benefit of the taxpayer; I am advocating it for the benefit of the
country.
If it appeared feasible, I should welcome permanent tax reduction at this
time. The estimated surplus, however, for June 30, 1928, is not much larger
than is required in a going business of nearly $4,000,000,000. We have had
but a few months' experience under the present revenue act and shall need
to know what is developed by the returns of income produced under it, which
are not required t o be made until about the time this session terminates,
and what the economic probabilities of the country are in the latter part
of 1927, before we can reach any justifiable conclusion as to permanent tax
reduction. Moreover the present surplus results from many nonrecurrent
items. Meantime, it is possible to grant some real relief by a simple
measure making reductions in the payments which accrue on the 15th of March
and June, 1927. I am very strongly of the conviction that this is so much a
purely business matter that it ought not to be dealt with in a partisan
spirit. The Congress has already set the notable example of treating tax
problems without much reference to party, which might well be continued.
What I desire to advocate most earnestly is relief for the country from
unnecessary tax burdens. We can not secure that if we stop to engage in a
partisan controversy. As I do not think any change in the special taxes, or
tiny permanent reduction is practical, I therefore urge both parties of the
House Ways and Means Committee to agree on a bill granting the temporary
relief which I have indicated. Such a reduction would directly affect
millions of taxpayers, release large sums for investment in new enterprise,
stimulating industrial production and agricultural consumption, and
indirectly benefiting every family in the whole country. These are my
convictions stated with full knowledge that it is for the Congress to
decide whether they judge it best to make such a reduction or leave the
surplus for the present year to be applied to retirement of the war debt.
That also is eventually tax reduction.