President Vetoes Income Tax Cuts

Northern Advocate, 17 June 1947, Page 5

President Vetoes Income Tax Cuts

(Received 11.20 a.m.) WASHINGTON, June 16. PRESIDENT TRUMAN today vetoed the Income Tax Reduction Bill. . The bill was designed to reduce income taxes- by 4,000,000,000 dollars annually. Individual reductions would have ranged from 10.5 to 30 per cent Tax relief this year now is

considered impossible

The veto can only be overridden by a two-thirds majority of both Houses of Congress. It is considered possible that the House of Representatives may override the veto, but the Senate seems certain to uphold it. Mr Truman, announcing the veto, said the bill offered “dubious, ill-pro-portioned and risky benefits at the expense of a sound tax policy and is, from the standpoint of Government finances, unsafe."

How long it would take to reach that point it was impossible to predict.

The United States still had heavy responsibilities for international relief which had an important bearing on the country’s efforts to secure a lasting peace.

“We still are in a transition period in which many uncertainties continue. Common prudence demands realistic and conservative management of fiscal affairs.”

He said he was deeply committed to “the right kind of tax reduction at the right time,” but tax reduction now would only increase inflationary pressures.

Mr Truman said a time of high employment, and high prices, wages and profits, called for a surplus in Government revenue over expenditure and the application of all, or much of this surplus, to a reduction of the public debt. Otherwise the country would be in a poorer position to support its- economy should an inflationary period develop. Criticising details of the bill, Mr Truman declared that it reduced taxes in the high-income bracket to “a grossly disproportionate extent.” and if the bills were approved these inequities would be “frozen into the taxation system.”

Mr Truman said if inflationary pressures were long continued, and if essential readjustments within the price structure were long deferred, it would be likely to induce the very recession which it .was sought to avoid. There should be immediate planning for a thorough-going revision of the tax system. The time for tax reduction would come when general inflationary pressures ceased and the price structure was more stable.