We must stop the spiral of inflation.
I trust that within the shortest possible time the Congress will make available to the Government the weapons that are so desperately needed in the fight against inflation.
One of the most powerful anti-inflationary factors in our economy today is the excess of Government revenues over expenditures.
Government expenditures have been and must continue to be held at the lowest safe levels. Since V-J day Federal expenditures have been sharply reduced. They have been cut from more than $63 billion in the fiscal year 1946 to less than $38 billion in the present fiscal year. The number of civilian employees has been cut nearly in half--from 3 3/4 million down to 2 million.
On the other hand, Government revenues must not be reduced. Until inflation has been stopped there should be no cut in taxes that is not offset by additions at another point in our tax structure.
Certain adjustments should be made within our existing tax structure that will not affect total receipts, yet will adjust the tax burden so that those least able to pay will have their burden lessened by the transfer of a portion of it to those best able to pay.
Many of our families today are suffering hardship because of the high cost of living. At the same time profits of corporations have reached an all-time record in 1947. Corporate profits total $17 billion after taxes. This compared with $12.5 billion in 1946, the previous high year.
Because of this extraordinarily high level of profits, corporations can well afford to carry a larger share of the taxload at this time.
During this period in which the high cost of living is bearing down on so many of our families, tax adjustments should be made to ease their burden. The low-income group particularly is being pressed very hard. To this group a tax adjustment would result in a saving that could be used to buy the necessities of life.
I recommend therefore that, effective January 1, 1948, a cost of living tax credit be extended to our people consisting of a credit of $40 to each individual taxpayer and an additional credit of $40 for each dependent. [p.10] Thus the income tax of a man with a wife and two children would be reduced $160. The credit would be extended to all taxpayers, but it would be particularly helpful to those in the low-income group.