Comparative Tax Burdens in America and Britain

Report Outline
Bonus Payments, Government Credit, and New Taxes
American and British Income Tax Rates and Burdens
Death Taxes in the United States and Great Britain
Proposals for Heavier Taxation in the United States
Special Focus

Bonus Payments, Government Credit, and New Taxes

By Deciding to take the unprecedented step of going in person to the Capitol to return the bill for cash payment of the bonus and inform Congress of his reasons for vetoing it, President Roosevelt indicated the serious view which he held of making this huge extra-budgetary expenditure by inflationary methods. If the veto should be sustained, and if Congress should then pass a bill for bonus payment without the greenback feature of the Patman measure, it is still believed that the President would refuse to grant his approval unless provision were made for levying of additional taxes. The administration's concern about this matter was plainly disclosed on April 23, 1935, when Secretary of the Treasury Morgenthau warned the Senate Finance Committee that, in his opinion, “the credit of the United States government depends very largely … upon scrupulous adherence to the President's [budget] program.”

I don't think we can continue to enjoy the present favorable rates and favorable market for the sale of government securities [he said] if new expenditures are incurred which go far beyond the limits of those which have already been outlined. The Treasury, therefore, would view with great concern the enactment of any bill which calls for large additional expenditures, without, compensating additional taxes. It seems to us of the utmost importance that if any adjusted service certificate settlement calling: for increased expenditures, or for earlier expenditures than those already taken into account, should be enacted, Congress should make provision for raising revenues sufficient to cover the additional expenditures in the year or years in which they are to be incurred.

The attitude that the administration would take on this point had been foreshadowed as long ago as last February, when the President, after signing a deficiency bill providing restoration of full pay for government workers on April 1 instead of July 1, 1935, declared that Congress should forthwith give consideration to increasing the government's income to take care of “this and any other new appropriations which tend to throw the regular budget out of balance.”