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Vernon C. Loen and Charles Leppert Files
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The original documents are located in Box 25, folder "Taxes (3)" of the Loen and Leppert
Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
1975
Digitized from Box 25 of the Loen and Leppert Files at the Gerald R. Ford Presidential Library
COMPARISON OF PLANS
Ullman Plan
President's Plan
Present Law
(1) Rebate on 1974 tax liabilities of approxi-
(1) Rebate on 1974 tax liabilities of 12%. Cap
(1) No provision.
mately 10%. Cap of $300. Reaches cap at
of $1,000. Paid in two distributions - May
approximately $20,000 income and will phase
and September. Provides some rebate to all
out rebate between $20,000 and $30,000 by
taxpayers peaking at approximately $40,000
cutting the percent number to 3%. Paid in
income bracket.
one lump sum in May.
Estimated cost - $12.2 B
Estimated cost - $7+ B
(2) (a) Increase the low income allowance to
(2) Increase the low income allowance to $2,000
(2) (a) Low income allowance is $1,300
$1,900 for single tax payers and to $2,500
for single taxpayers and to $2,600 for married.
for single and married taxpayers.
for married.
Estimated cost - $5 B
(b) The percentage standard deduction
(b) Increase the percentage standard deduction
is 15% with a ceiling of $2,000.
from 15% to 16% with a maximum allowable
deduction of $2,500 for a single taypayer
and $3000 for married.
Estimated cost - $5+ B
(3) Provide a 5% credit on earned income
(3) Provide an $80 cash payment for nontaxpayers.
(3) No provision.
(wages and salaries) with a credit ceiling
Estimated cost - $2 B
of $200. Provide for a $4,000 to $8,000
[These two are similar in nature.]
adjusted gross income phaseout of the credit.
Estimated cost - $3+ B
(4) Increase investment tax credit for all
(4) Increase investment tax credit for all
(4) (a) 4% credit for utilities
business to 10%. Increase limitation for
business to 12%. Increase limitation on
(b) 7% credit for all other business.
utilities to 100% for two years and phase
utilities to 75% and phase back to 50% over
(c) Limitation of 50% for all business.
back to 50% at 10% per year over a five
a five year period. Limitation on all other
year period. Limitation for all other
business remains at 50%.
business remains at 50%.
Estimated cost - $4 B
Estimated cost - $3.2 B
(5) Increase the surtax exemption level for
(5) Reduce corporate tax rate from 48% to 42%.
(5) Tax rate of 22% on first $25,000 of taxable
corporate forms of business from $25,000
Estimated cost - $6 B
income and surtax of 26% on all above or
to $35,000.
[Ullman proposal apparently, however, does
marginal rate of 48%.
Estimated cost - $600 M
not preclude rate cut at time of energy
package.
(6) Utility reinvestment feature whereby there
(6) Similar to October 1974 proposal with respect
(6) No provision.
would be no tax paid on utility dividends
to preferred stock dividend.
if recipient reinvested in special issue
equity shares of the utility within a limited
period of time.
Estimated cost - $200 - $300 M
TOTAL ESTIMATED RELIEF - $19.4 B
INDIVIDUALS - $15.3 B
BUSINESS - $4.1 B
NOTES:
1. Ullman would make items 2 through 6 temporary for 1975
until and unless revenue from energy package is avail-
able -- then they become permanent.
2. The Gibbons, Karth, Corman proposal is very similar except
the rebate on 1974 taxes would have a higher percentage --
over 12 -- with a cap of $300 (thus rebate primarily to
low income taxpayers) and possibly repeal of the percentage
depletion allowance on oil.
3. Apparently the second energy relief package of a permanent
nature may include tax reductions for both individuals and
business.
THE WHITE HOUSE
WASHINGTON
March 4, 1975
MEMORANDUM FOR:
JOHN O. MARSH
MAX L. FRIEDERSDORF
THRU:
VERN LOEN VC
FROM:
DOUGLAS P. BENNETT DPB
SUBJECT:
Tax Reduction Act of 1975
This $21. 3 B bill passed the House last week and is now in the Senate
Finance Committee. I think it is clear that a few more billion dollars
will be added in the Senate. Dr. Larry Woodworth (Chief of Staff,
Joint Tax Committee) advised me that he is trying to move those added
dollars in the direction the President is seeking, i.e. providing rebates
for more mid-income individuals who generally itemize in preparing
their tax returns. This was basically the approach of the Conable sub-
stitute that was defeated in the House last week by a vote of 251 to 160.
It appears that we can expect a Senate tax bill costing about $25 B.
cc: J. Cannon
P. O'Neill
C. Leppert
Date: MAR 1 4 1975
MEMORANDUM FOR: SECRETARY SIMON
From:
Frederic W. Hickman
Fult
Assistant Secretary for Tax Policy
Subject: Finance Committee Bill
The Senate Finance Committee ordered reported a
bill providing total tax cuts of $29.2 billion, an
increase of $9.3 billion over the $19.9 billion of tax
cuts in the House bill. The tax reductions would be
mainly directed toward individuals, with $21.2 billion
for individuals and $8 billion for businesses. More-
over, $850 million of the business tax reductions would
be passed on to employees through stock ownership
plans and should really be counted as tax cuts for
individuals.
The Finance Committee bill contains the same rebate
provision as the House bill, providing $8.1 billion in
rebates. Of the total $29.2 billion in tax reductions,
almost $16 billion are structural changes of a permanent
or semi-permanent nature that would be very hard to
reverse.
The Finance Committee bill does not contain any
provision on depletion, but the final vote was quite
close. It was left open whether the Committee would
meet next Monday to agree on Committee floor amendments.
The bill could go to the floor by midweek. It is uncer-
tain what will happen on depletion, and that will affect
timing. Undoubtedly, there will be floor amendments, but
the bill may go to conference by the end of the week.
The main Finance Committee changes are summarized
below. The revenue costs of specific items are set out
in the attached table.
Changes affecting individual taxpayers were:
-- elimination of House standard deduction changes
and substitution of optional $200 tax credit in lieu of
Initiator
Reviewer
Reviewer
Reviewer
Reviewer
Ex. Sec.
Surname
DSCollinson
nitials / Date
DC /3/14/75
/
/
/
Form 0S-3129
Department of Treasury
- 2 -
$750 personal exemption. This concentrates benefits on
taxpayers in the 27 percent and lower marginal tax
brackets and provides greater benefits for large
families than small, as compared to the House bill.
-- reduction of tax rates in the first four brackets
(up to $4,000 of taxable income) by 1 percent. This
provides a tax cut of $40 for all taxpayers with $4,000
or more of taxable income.
-- revision of House earned income credit (tax
credit of 5 percent of first $4,000 of earned income,
phased out between $4,000 and $6,000 of adjusted gross
income) to provide maximum $400 tax credit equal to
10 percent of first $4,000 of earned income, phased
out between $4,000 and $8,000 of expanded adjusted
gross income (including welfare payments). Only house-
holds with dependent children would be eligible.
--- provision of 5 percent tax credit for purchases
of new and used houses (or mobile homes) during the
period March 13, 1975, through December 31, 1975, with a
maximum credit of $2,000.
-- provision of three-year carryback of capital losses.
This will be modeled after a provision approved by Ways
and Means last year, which applied only if capital losses
exceeded $30,000 for the taxable year.
Generally the economic stimulus effected by these
provisions would be accomplished through the withholding
tax system, that is, through reduced withholding taxes.
However, the withholding tables could not be adjusted to
reflect the new capital loss carryback provision (costing
$100 million). And the stimulus of the housing credit
would not be effected through the withholding system
but through the direct impact on purchases of housing.
Changes affecting business taxpayers were:
-- permanent increase in the investment credit
from 7 percent to 10 percent, plus a temporary increase
to 12 percent through 1976. The $100 million limitation
on the maximum investment credit, which affected only
AT&T, was eliminated. To be eligible for the temporary
increase, a corporate taxpayer would have to agree to
contribute its stock worth one-half of the increase
(i.e., 1 percent) to an Employee Stock Ownership Plan
(ESOP). The limitation on the amount of used property
that can qualify for the credit, raised by the House bill
from $50,000 to $75,000, was entirely eliminated.
- 3 -
-- liberalization of the business net operating loss
carryover provisions to permit carryback of losses for
eight years, thus permitting an immediate cash refund.
This provision would be retroactive to losses occurring
in 1970 and thereafter and would give Pan American
$40 million, Chrysler $150 million, and Lockheed $65 million
(all estimates). To be eligible, a corporation would have
to agree to contribute its stock worth one-half of the
benefits to an ESOP, except that half of that (i.e.,
12-1/2 percent of the benefits) could be put in a
Supplemental Unemployment Benefits Plan.
-- reduction of the tax rate on the first $50,000 of
corporate earnings from 22 percent to 18 percent. For
all corporations having taxable income of $50,000 or more,
the tax reduction would be $2,000. The House bill had
increased from $25,000 to $50,000 the amount to which the
lower rate applies. Unlike the House provision, the Senate
bill provides some relief for firms with taxable income of
$25,000 or less, but both bills tend to cause the wealthy
owners of small corporations to retain earnings in the
corporation (rather than paying out earnings as salaries)
in order to benefit from the lower corporate rate.
-- repeal of the excise tax on trucks, buses and
truck parts.
Other minor business tax changes were an increase of
the accumulated earnings tax credit from $100,000 to
$150,000 and a liberalization of eligibility requirements
for the little used work incentive (WIN) program tax
credit of 20 percent of the first twelve months' wages
for certain employees hired off the rolls of the chronically
unemployed.
Attachment
SUMMARY OF REVENUE EFFECTS
Individuals
Finance
Net
House
Comm.
Change
Rebate
8.1
8.1
:
Standard deduction
5.1
--
+1.0
$200 optional credit
--
6.1
Reduce lower bracket
rates
--
2.0
+2.0
Earned income credit
3.0
1.7
-1.3
5% housing credit
--
3.2
+3.2
3-year capital loss
--
0.1
+0.1
subtotal
16.2
21.2
+5.0
Business
Investment credit
2.5
4.3
+1.8
Corp. surtax
exemption
1.2
1.2
--
Net operating loss
--
1.0
+1.0
4% reduction, first
$50,000 of income
--
0.7
+0.7
Used machinery invest-
ment credit
--
0.1
+0.1
Trucks & parts excises
--
0.7
+0.7
Accumulated earnings
credit
*
*
--
WIN credit
--
*
*
subtotal
3.7
8.0
+4.3
Total
19.9
29.2
+9.3
*Less than $50 million
March 25, 1975
The Administration opposes repeal of the truck and related excise taxes at this
time for the following reasons:
1. Transportation Policy Impact
As indicated in the recent report of the U. S. Railway Association, one
of the major problems confronting the rail freight industry is the view that
rail-competitive heavy trucks do not pay their "fair share" of the costs of the
Federal highway program, thus receiving a governmental subsidy. By benefitting
the heavy trailer-trucks, this proposed action only exacerbates this problem and
works against the development of a balanced, equitable Federal transportation
policy/program. (See attachment)
2. Limits Future Options re Highway Program
Both the Administration and the Congress are committed
this
Congress
to
making fundamental decisions on the future direction of the Federal highway
program, including the Highway Trust Fund. This step prematurely limits the
policy options available for consideration in this important issue.
3. Impact on Highway Structure
With Congressional concern over the impact of heavy trucks on the Nation's
highway infrastructure, and the refocusing of the Federal program on necessary
rehabilitation and reconstruction of the highway system, it is inconsistent to
remove taxes on the trucks which impose significant wear and tear on the roads.
4. Revenue Loss to Trust Fund
With the release of $2 billion in additional FY 75 highway funds and the
possibility of Congressional action to release additional funds for immediate
obligation, action now to remove considerable cash income flowing into the
Trust Fund needed to pay off these additional contractual obligations seems
inadvisable.
Washington Post, Feb 27
Imbalance in Public Support
Cited in ₹ Railway Failures
By William H. Jones
underlying factor is a "significant dif-
more than $450 billion-most of it
Washington Post Staff Writer
ference in the degree of public support
since 1920 and most not covered by
The Northeast railroad crisis goes
enjoyed by the various transportation
user charges.
systems.
back at least to 1930, the first year in
For highways and motor transporta-
The association said massive public
which more freight was hauled on
tion alone, the association said. govern-
outlays have favored autos, trucks,
ment outlays exceeded S20 billion an-
trucks than on trains.
barges and airlines by providing
nually in the early 1970s While fuel
Motor transportation, aided by mod-
ground facilities and rights-of-way. It
taxes and other fees paid much of the
ern technology and marketing, has
said only a portion of this money is re-
highway development and mainte-
been chipping away at rail business
covered in user fees.
mance costs. the association said.
ever since. profiting also from govern-
Through 1973, according to research
Many experts believe that the large
ment spending on highways.
studies for the association, federal.
rail-competitive trucks have not paid
After World War II, the trend to-
state and local government spending
their share relative to the benefits
ward motor transportation of small
'for non-rail transportation has totaled
they receive."
shipments and sophisticated equip-
The government's 19th Century land
ment over short distances became
grants to railroads pale by contrast,
rapid.
the association said.
At about the same time, Americans
Intercity Freight
Key
The report cited these other develop-
switched en masse to automobiles for
Monnage
ments as leading to the current
intercity travel. That, coupled with
issue situation:
new competition from airlines, pushed
Northeast and
An inability of railroads to adjust
rail passenger routes to a gradual
Midwest Region
Let's
death.
1970
to changing economic developments—
It soon became apparent that even
not
such as moving plants South for
make
cheaper labor-because rail facilities
freight operations in the densely popu-
were fixed in place. Also. the report
lated Middle Atlantic and Northeast
region were in jeopardy.
it
said, the Interstate Commerce Com-
Railroads
Inctor
mission "restrained" flexibility in set-
After the final bankruptcy of the
33%
Carriers
worse
ting rates, in merging, and in abandon-
New York, New Haven & Hartford
37%
ing absolete properties and branch
Railroad, mergers were championed as
by
lines.
the best way to preserve rail service. In
1968, the Pennsylvania and New York
Rinding
A "preoccupation" by some rail
Central were consolidated into the na-
Pipalines
Water
tock
managements with operating problems
14%
Carriers
while they neglected marketing. In ad-
tion's biggest transportation company.
16%
Taken
dition, management and labor did not
But two years later it was bankrupt.
agree on plans to increase productiv-
Flow
ity.
The U.S. Railway Association said
yesterday there is "no single cause and
Loss of business to trucks
A lack of money to improve facili-
indicates the railroads'
ties, resulting in a rundown and de-
Some items in this folder were not digitized because it contains copyrighted
materials. Please contact the Gerald R. Ford Presidential Library for access to
these materials.
CONFERENCE ACTIONS - 3/26/75
Conference was completed at approximately 3:00 p.m. The following
agreements were reached:
(1) Foreign source income - agreed to compromise on deferral of
foreign source income affecting "tax haven" countries (Treasury indorses).
Revenue gain - $225 M.
Agreed to compromise tax credit provision relating to oil income.
(Treasury indorses). Revenue gain - $300 M.
(2)
Percentage depletion of oil and gas - agreed to compromise with
following elements:
(a) 2000 bbl. exemption phased down by 200 bbls. per day
each year to a 1000 bbl. permanent exemption: 1975 - 2000
1976 - 1800
1977 - 1600
1978 - 1400
1979 - 1200
1980 - 1000
(b) Percentage holds at 22% to 1980 then phases down over
4 years to 15%:
1981 - 20%
1982 - 18%
1983 - 16%
1984 - 15%
(c) The 50% limitation on amount of depletion that can be
taken against taxable income is increased to 65%.
(d) Secondary and tertiary wells keep the 22% depletion
until 1984. After 1984 the percentage drops to 15%.
Revenue gain - $1.7B.
(3) Housing tax credit - adopted modified Senate provision. Credit
of 5% of purchase price to maximum of $2000 for new houses in being as
of 3/25/74. Price must be certified by builder/seller as the lowest price
offered. False certification subjects seller to money damages and criminal
penalties. Revenue loss - $. 6B.
- 2 -
(4) Social Security payment - adopted modified Senate provision cutting
payment from $100 to $50. Revenue loss - $1.7B.
(5) Individual tax cuts -- adopted compromise:
(a) Minimum standard deduction increased from $1300 to
$1600 for single taxpayers and from $1300 to $1900 for join{return taxpayers.
(b) Increased the percentage standard deduction from 15%
to 16% and the maximum allowed for singles from $2000 to $25000 and for joint
returns from $2000 to $3000.
(c) Provided for a tax credit of $30 per person (dependents).
Revenue Loss - $7.8B.
TOTAL REVENUE LOSS - $22,8B
3/25/75]
TAX REDUCTION BILL - H. R. 2166
The following is a summary of action taken by the House and Senate conferees
by the 6:30p. m. adjournment on Tuesday, March 25. Conferees will meet again
Wednesday at 9:00 a.m.
Generally, agreement was reached on the less controversial items while
compromises have not yet been worked out on the additonal reductions for indi-
viduals (increase in standard deduction, $200 optional credit in lieu of personal
exemption and rate reduction for low income taxpayers), new house purchase
credit, $100 payment to certain program beneficiaries, taxation of foreign source
income and percentage depletion of oil and gas.
Agreement reached on:
(1) Rebate on 1974 taxes - accepted House version. 10% of tax liability up
to maximum of $200, minimum of $100. $200 maximum phased down as AGI rises
from $20, 000 to $30,000. Revenue loss - $8. 1B.
(2) Earned income credit - accepted Senate version. Refundable credit of
10% of earned income up to $400. $400 phased out as income rises from $4,000
to $8,000. Available only to families with dependent children. Better known as
the "work bonus". Revenue loss - $1.5B.
(3) Child care deduction - present law allowed an itemized deduction of up
to $4,800 phased out for AGI above $18,000. The AGI level was raised to $35,000.
Revenue loss - $9 M.
(4) Investment Tax Credit - increased the investment tax credit for all tax-
payers to 10% on a 2 year temporary basis. Also to 11% if the additional 1% is
contributed to an employee stock ownership plan (ESOP). Removed $100 million
cap on utilities (affected ATT only). Increased the 50% limitation for public
utilities to 100% for 1975 and 1976 and then phased back at 10% a year over a
5 year period until 1981 when the 50% holds. Normalization of the ITC benefit
for public utilities. Increased the limit of used property as qualified investment
from $50,000 to $100, 000. Allows ITC for progress payments when property
takes more than two years to construct. Revenue loss - $3.39B.
(5) Corporate surtax exemption and rate reduction increased surtax
exemption from $25, 000 to $50,000 and decreased the rate on the first $25,000
from 22% to 20%. Rate on second $25,000 is 22%. Revenue loss - $1.55B.
(6) Accumulated Earnings Credit - accepted Senate version. Increases the
amount of accumulated earnings credit from $100, 000 to $150,000. Revenue
loss negligible.
- 2 -
(7) Net Operating Loss (NOL) - dropped in conference. Would have allowed
substitution of carryover years for carryback of NOL. Present law is 3 back and
5 forward. This amendment has been tabbed the "Chrysler Amendment".
(8) Federal welfare recipients employment incentive (WIN) tax credit -
generally broadens the WIN credit for employers. Revenue loss - under $3 million.
(9) Excise tax on trucks, etc, - dropped in conference. Would have repealed
10% excise tax on trucks, buses, etc. and 8% tax on related parts.
(10) Tax credit for insulation and solar equipment - dropped in conference
but will be included in energy bill.
(11) Tax exemption for homeowner's associations - dropped in conference.
(12) Pension plans relative to time when contribution deemed made - allows
1974 rule for 1975. Revenue loss - none.
(13) Emergency unemployment compensation benefits - agreed to Senate
allowing 13 weeks additional benefits to those who have exhausted 52 weeks of
benefits. Revenue loss - $200 million.
(14) Required dying of fuel heating oil - dropped in conference - consider
in energy bill.
(15) Tax Free Rollover of home purchase - agreed to Senate. Time period
for rollover extended from 1 year to 18 months for purposes of nonrecognition
of gain. Time for construction of new residence extended from 18 to 24 months.
Revenue loss - negligible.
SUMMARY OF REVENUE EFFECTS
(As of 7:00 p.m. 3/25/75)
(billions)
Net
Tax Rate Reductions
House
Senate
Change
Conference
Individuals
(1) Rebate
8.1
9.7
+1.6
8.1
(2) Standard Ded.
5.2
-
$200 Optional Credit
-
6.3
+3.4
Tax Rate Reductions
-
2.3
(3) Earned Income Credit
2.9
1.5
-1.4
1.5
(4) House Purchase Credit
-
1.1
+1.1
(5)
Child Care
-
1.7
+1.7
.090
(6) Home Insulation
-
0.7
+0.7
Dropped
Subtotal
16.2
23.3
+7.1
9.69
Business
(1) ITC
2.4
4.3
+1.9
3.39
(2) Corp. Surtax Exempt.
1.2
1.2
-
1.55 (es
(3) Tax Rate Reductions
-
0.7
+0.7
(4) NOL
-
0.5
+0.5
Dropped
(5) Repeal Truck Excise Tax
-
0.7
+0.7
Dropped
Subtotal
3.6
7.4
+3.8
4.94
Increased Expenditures
(1) $100 Payment to
Certain Program Beneficiaries -
3.4
+3.4
(2) Emergency Unemployment
Benefits
-
0.2
+0.2
0.2
Subtotal
-
3.6
+3.6
0.2
- 2 -
Net
Tax Rate Reductions
House
Senate
Change
Conference
Tax Increases
(1) Depletion
(2.2)
(1.7)
(-0.5)
(2) Foreign Oil Taxation
-
(1.5)
(+1.5)
(3) Deferral of Foreign income
-
(0.5)
(+0.5)
(2.2)
(3.7)
(+1.5)
I. Total Net
17.6
30.6
+13.0
Revenue Loss
Before Conference
II. Total Net Revenue
$24.22B
Loss After Conference
of 3/25/75
III. Reduction from Senate bill - $6.38B
File, please
Warren
Hendrubs
THE WHITE HOUSE
WASHINGTON
March 19, 1975
MEMORANDUM FOR:
MAX L. FRIEDERSDORF
THRU:
VERN LOEN
FROM:
DOUGLAS P. BENNETT
DPB
SUBJECT:
Ways and Means Consideration
of Energy/Tax Legislation
Since Monday, when Chairman A1 Ullman introduced "his" solution to the
energy problem, I have had a chance to confer with just about every mem-
ber of the Ways and Means Committee to get their reactions to that pro-
posal and their feelings with regard to the possibility of its approval in
Committee. Clearly there is no consensus. The Republicans are annoyed
because they were not included in the Democratic Task Force on Ways and
Means development of this proposal. The Democratic members on the
Committee itself are not in unanimity with regard to its provisions. And,
there is an attitude on the part of some of the members of the Committee that
there is no energy problem. This is somewhat a reflection of public opinion
resulting from the availability of gasoline even to the extent that "price wars"
are going on in some parts of the country. This, obviously, makes it very
difficult for those members who recognize the problem to try to convince
other members on the Committee as well as the full House that something
"tough" must be done.
Some very interesting developments are occuring as voiced by the three
"quasi liberal" leaders on the Committee -- I am referring to Joe Karth,
Sam Gibbons and Jim Corman (they have emerged as the true opinion leaders
on the Democrat si le). In effect they told me: (1) the Committee will not
approve the Ullman bill, and (2) the President can have his program if he
really wants it. This is particularly encouraging as these three are among
the smartest on the Committee and can, in fact, guide the direction of the
legislation. They may have a few hangups with the program as a whole,
but I believe these can be ironed out. These details can be worked out as
the Committee proceeds in making up a bill. However, a strategy session
within the Administration should probably be held within a few days to get
our ducks in line.
(more)
2
However, we may run the risk of having a legislative program developed
which does nothing if a "no energy problem" attitude prevails. It seems
to me that it would be very, very helpful if Secretary Kissinger testified
before the Ways and Means Committee with specific respect to the inter- -
national aspects of the problem and the attendant urgency of strong action
necessary. The subject could be placed in sharp perspective, particularly,
if to the extent possible it were an Open Session with the media picking it
up and then for response to any sensitive aspects of the issue, the Com-
mittee went into Executive Session. This would in my mind stimulate the
Committee into doing the right thing and also serve the purpose through
the media of educating the American public of exactly the situation we are
in and could expect to face if our reliance on imported oil is not reduced.
If the decision is made to do this, I think from a mechanical standpoint
we should float it with A1 Ullman and Herb Schneebeli to get their blessings
and to establish the parameters of such testimony. I am deeply concerned
that in the absence of such a move we might be faced with a "Caspar
Milquetoast" bill from Ways and Means.
cc: Jack Marsh
William Kendall
Pat O'Donnell
Charles Leppert
THE WHITE HOUSE
WASHINGTON
IMMEDIATE
March 25, 1975
MEMORANDUM FOR
BILL KENDALL
VERN LOEN
DOUG BENNETT
FROM:
MIKE DUVAL
SUBJECT:
TAX CUT BILL
The Senate, during its midnight massacre, included a tax
cut amendment which would repeal the 10% excise tax on
trucks and trailers. This comes out to about $800 million
a year.
We should indicate strong opposition to this for two essen-
tial reasons:
1. Trucks don't pay their full share now, according to
some information we have (which is old but the best
available). In fact, because of the new weight limits,
they will impose even greater maintenance costs on
the highway system. Any exemption for trucks has
obvious implications on railroads, aviation and other
competing modes.
2. As the President announced in his '76 Budget, he will
propose a massive restructuring of the entire Highway
Trust Fund, including elements of highway user taxes.
The Senate amendment is inconsistent with the President's
legislative proposal which will likely be transmitted to
the Hill shortly after the recess.
I am alerting Doug Bennett, by telephone, to the above position.
Ted Lutz of DOT will provide Bennett and Fred Webber (Treasury
Congressional Relations) with a one-page fact sheet elaborating
on the above.
I cannot overemphasize the importance of opposing this. It
would be a death blow to the integrity of the President's
highway proposal, and it will raise serious problems in terms
of demands for similar treatment from the railroads and avia-
tion interest groups.
THE WHITE HOUSE
WASHINGTON
March 28, 1975
MEMORANDUM FOR THE PRESIDENT
THROUGH:
JOHN MARSH
DON RUMSFELD
MAX FRIEDERSDORF
FROM:
VERNON C. LOEN
VL
SUBJECT:
Tax Reduction Act Conference Report
(H.R.2166)
Counsellor Marsh asked me to give you the benefit of those House contacts
we have had since the vote Wednesday night.
After talking personally with a number of members immediately after the
vote, I feel sure a veto could be sustained. Among the 20 absentees who
could be counted upon to sustain a veto are: Ashbrook, Bell, Cederberg,
Dickinson; Erlenborn, Skubitz, and Wiggins, who in themselves constitute
7 of the necessary 20 vote gain from our 125-vote base. Democratic
absentees who might well vote to sustain are: Fuqua, Hays of Ohio,
Ichord, Passman, Rees (who took a walk on both votes after speaking
against the rule) and Runnels.
Among those who have told me they would switch their votes to sustain
your veto are: Don Clausen, Don Young, George O'Brien, Bill Frenzel
and Larry Pressler.
Henson Moore, the freshman Republican from Louisiana, just called in
strongly recommending a veto based upon public reaction to his "nay"
vote in five towns of his District. Similarly, freshman Republican
Tom Hagedorn of Minnesota, called to urge a veto based upon the public
reaction in his District. He also voted "no".
I believe you have received the input from Minority Leader John Rhodes,
who strongly and publicly urged a veto; Barber Conable, who wants a
veto, but will understand if you feel you must sign; and Democrats
Joe Waggonner and Phil Landrum, who fear you will get a worse bill later.
-2-
If you intend to sign the measure, I believe the conservatives could
be pacified by sending up legislation to repeal the offensive sections
and with a strong signing statement that you will veto every
inflationary measure coming to your desk regardless of how many voted
for it. The huge budgetary deficits in prospect this year and next
are having a real impact on the House now, particularly after the Budget
Committee's report.
Signing also could be justified if your economic advisors feel a tax
stimulus still is necessary to combat recession.
Still another factor to consider is the fate of your energy recommendations
also resting in the hands of the Ways and Means Committee. If you sign,
I would recommend a phone call in advance to Chairman Ullman to advise
him of your decision and to urge his reciprocal action by moving speedily
on an acceptable energy tax bill.
Our staff is inclined to recommend that you sign the measure, but with
the above caveats and perhaps with a simultaneous television address
to the Nation.
WHAT WILL BE THE BUDGET DEFICIT?
(in billions)
THE CURRENT ESTIMATE (with tax bill as written)
$60
If Congress rejects President's holddown legislation-ADD
12
If features of tax bill become permanent-
ADD
5
NEW CONGRESSIONAL SPENDING PROPOSALS
$30
POTENTIAL DEFICIT THREAT
$100 BILLION
New Congressional Spending Proposals
Anti-recession grants to State and local governments
$5.0
Broadened unemployment compensation benefits
4.0
Additional public service jobs
3.0
Increased public works projects for State and local governments
3.0
Increased farm subsidies
2.2
Additional water pollution control and abatement projects
1.9
New housing subsidies
1.9
Increased urban mass transit and highway projects
1.8
Health insurance subsidies for the unemployed
1.5
Increased school feeding and related programs
1.4
Increased veterans benefits
0.8
Additional small business loans
0.4
Other increases in a wide variety of spending programs
3.2
March 31, 1975
PRESIDENTIAL DOCUMENTS: GERALD R. FORD, 1975
319
replaced by new procedures which will provide for pe-
Assistance to Civilian Refugees in
riodic registration.
South Vietnam
Now, THEREFORE, I, GERALD R. FORD, President of
the United States of America, by virtue of the authority
Statement by the President. March 29, 1975
vested in me by the Constitution and the statutes of the
United States, including the Military Selective Service
A severe emergency exists in the coastal communities
Act, as amended, do hereby revoke Proclamations No.
of South Vietriam which are swollen with helpless civilian
2799 of July 20, 1948, No. 2937 of August 16, 1951, No.
refugees who have fled the North Vietnam offensive.
2938 of August 16, 1951, No. 2942 of August 30, 1951,
They are desperately in need of any assistance we and
No. 2972 of April 17, 1952, No. 3314 of September 14,
other nations can provide.
1959, and No. 4101 of January 13, 1972; thereby termi-
To help the refugees reach safe haven further south, I
have ordered American naval transports and contract
nating the present procedures for registration under the
vessels to assist in the evacuation of refugees from the
Military Selective Service Act, as amended.
coastal seaports.
IN WITNESS WHEREOF, I have hereunto set my hand
I also call upon all nations and corporations that have
this twenty-ninth day of March in the year of our Lord
ships in the vicinity of the South Vietnamese coast to help
nineteen hundred seventy-five, and of the Independence
evacuate refugees to safety in the south.
of the United States of America the one hundred ninety-
I have directed that U.S. Government resources be
ninth.
made available to meet immediate humanitarian needs
GERALD R. FORD
and I have appointed Mr. Daniel Parker, Administrator
[Filed with the Office of the Federal Register, 11:55 a.m.,
of the Agency for International Development, as my
March 31, 1975]
Special Coordinator for Disaster Relief.
TAX REDUCTION ACT OF 1975
The President's Address to the Nation Announcing His Decision To Sign
H.R. 2166. March 29, 1975
Fellow Americans and fellow taxpayers:
Eleven weeks ago, in mid-January, I requested the new Congress to
pass as its first priority a simple $16 billion reduction in Federal income
taxes in order to stimulate economic activity and put people back to work.
I asked for a one-time refund to individual 1974 taxpayers up to a
maximum of $1,000, enough to assist in the purchase of new cars, home
appliances, or other improvements, thus helping business and workers in
areas that have been especially hard hit by the recession. I also asked for
bigger investment credits to encourage all businessmen and farmers to
expand and make more jobs.
Jobs were then and are now my main concern. Unfortunately,
though some other economic signs are improving, the employment picture
remains bleak. I want most to help those who want to get back to work
in productive jobs. This can best be done by temporary tax incentives to
charge up our free enterprise system-not by government handouts and
make-work programs that go on forever.
Therefore, over the past few months, I have repeatedly urged the
Congress to get a straightforward tax cut bill on my desk by Easter, one
that would restore some of the buying power American families lost to
inflation and rising prices in 1973 and 1974. My objective was to put
money in the pockets of the American people promptly rather than have
the Congress dream up new schemes for more of your money to be spent
by the Government in Washington.
Volume 11-Number 14
320
PRESIDENTIAL DOCUMENTS: GERALD R. FORD, 1975
Last Wednesday, before recessing, the Congress did pass a tax
reduction bill, which is here before me.
The tax cut finally adopted by the Congress represents a compromise
between the $16 billion I recommended in January and the $32 billion
figure passed by the Senate. I said that I would accept a reasonable com-
promise. And the $23 billion tax reduction is within reason.
However, this bill also distributes the cuts differently and, in my
opinion, fails to give adequate tax relief to the millions of middle-income
taxpayers who already contribute the biggest share of Federal taxes.
But the most troublesome defect of this bill is the fact that the
Congress added to an urgently needed anti-recession tax reduction a lot
of extraneous changes in our tax laws, some well-intentioned but very ill-
considered, which should have waited for deliberate action in committee
hearings and full debate by all Members. Instead, they were adopted in
a hectic, last-minute session before recessing.
This is no way to legislate fundamental tax reforms, and every
Member of the Congress knows it. Upon their return, I will again ask the
House and Senate to work with me on a comprehensive review of our tax
structure to eliminate inequities and to ensure adequate revenues for the
future without crippling economic growth.
I commend those Members of the Congress who fought for a clean
and uncomplicated tax cut to create more jobs and speed economic
recovery. If I were still in the House of Representatives, I would have
opposed extraneous amendments and would have voted to send this bill
back to committee for further cleaning up.
As President, however, I cannot, under the Constitution, accept a
part of this bill and reject the rest. It comes before me on a take-it-or-
leave-it basis. The Congress has gone home. I believe my veto would
eventually be sustained. But I am by no means sure that this Congress
would send me a better bill. It might even be worse.
The people of this country need to know, right now, how to plan
their financial affairs for the rest of this year. Farmers and businessmen
have already waited too long to find out what investments they can make
to improve their production and put people back on the payroll.
Confidence depends on certainty. And while the Congress deliberated,
uncertainty has clouded financial planning throughout the country. Our
country needs the stimulus and the support of a tax cut and needs it now.
I have, therefore, decided to sign this bill so that its economic benefits
can begin to work.
I do this despite the serious drawbacks in the bill. Most of the draw-
backs are enacted for only 1 year. I strongly urge the Members of the
Congress to calmly reflect upon these provisions and let the worst expire.
However, any damage they do is outweighed by the urgent necessity of
an anti-recession tax reduction right now.
Even if I asked the Congress to send me a better bill-and it did-it
would take too long a time to get one back, and I cannot, in good con-
science, risk more delay. But I will work with the Congress to not only
remedy the deficiencies in this bill but also the dangerous actions and
attitudes towards huge Federal deficits some Members have already
shown in other legislative decisions.
Volume 11-Number 14
PRESIDENTIAL DOCUMENTS: GERALD R. FORD, 1975
321
The first part of my economic recovery recommendations last
January-a prompt tax cut of reasonable size-now becomes law.
[At this point, the President signed H.R. 2166.]
The second and equally important part of my economic program
was to restrain Federal spending by cutting back $17 billion in existing
programs and by a 1-year moratorium on all new Federal spending
programs, except in the critical field of energy.
So far, these proposals have been mostly ignored or rejected by a
majority of the Members of the Congress. Now that we have reduced
our tax revenues by some $7 billion more than I proposed, we must move
to reduce Federal spending in every way we can. We cannot afford
another round of inflation due to giant and growing deficits that would
cancel out all our expected gains in economic recovery.
Maybe I can show you the situation better on this chart.
If Congress had accepted all my economic recovery proposals, both
for tax cuts and spending cuts, the estimated Federal deficit for fiscal
year 1976 would have been about $52 billion, as represented by this col-
umn [indicating].
This kind of a deficit is far too high, but most of it was unavoidable
and was brought about by mandatory Federal payment programs already
on the statute books, by increased unemployment compensation, and re-
duced tax revenues due to the recession.
This is where we are today. The tax cuts in the bill I have just signed
and other changes will bring the estimated fiscal year 1976 deficit up to
approximately $60 billion [indicating].
Since January, Congress has rejected or ignored most of my re-
quested spending cuts. If Congress fails to make these reductions, it will
add up to about $12 billion to the contemplated 1976 deficit. On top of
that, as I look at the new spending actions which committees of the Con-
gress are already seriously considering, I can easily add up another $30
billion of spending. This would bring the deficit to the enormous total of
$100 billion [indicating].
Deficits of this magnitude are far too dangerous to permit. They
threaten another vicious spiral of runaway, double-digit inflation which
could well choke off any economic recovery.
Interest rates, now starting down, would again climb as the Federal
Government borrowed from the private money market to finance its $100
billion deficit. Individual citizens would be unable to borrow money for
new homes, cars, and other needs. Businesses, despite the increased tax
credit, would delay investments and expansions to put the unemployed
back to work. I am, therefore, serving notice now that this is as high as our
fiscal 1976 deficit should go. I am drawing the line right here [indicating
$60 billion on chart].
This is as far as we dare to go.
I will insist (resist) every attempt by the Congress to add another
dollar to this deficit by new spending programs. I will make no excep-
tions, except where our long-range national security interests are in-
volved, as in the attainment of energy independence or for urgent hu-
manitarian needs.
Volume 11-Number 14
322
PRESIDENTIAL DOCUMENTS: GERALD R. FORD, 1975
In short, in signing this bill, I am keeping my promise to reach a
reasonable compromise with the Congress and to provide a needed boost
to the economy. I must say again, this is as far as I will go.
If we use common sense and prudence, I am confident that the
present recession will retreat into history.
If your Congressmen and your Senators return from their recess with
new awareness of your deep concern and desire for caution and care in
steering our difficult economic course, we will soon get back on the
broad highway of increasing productivity and prosperity for all our
people.
Thank you and good evening.
NOTE: The President spoke at 7:31 p.m. in the Oval Office at the White House. His
address was broadcast live on radio and television.
As enacted, the bill (H.R. 2166) is Public Law 94-12, approved March 29, 1975.
Bakersfield, California
ning to be the country that our forefathers wanted it to be,
and we are going to make it.
The President's Remarks Upon Arrival at Meadows
So, our third century, which begins in a few months, is
Field En Route to the Naval Petroleum Reserve
a century that will make America both at home and abroad
No. 1 at Elk Hills, California. March 31, 1975
an America that can continue to give leadership and can
continue to give to our people all of the blessings of our
Let me express again my very deep appreciation to all
great country.
of you, coming out on this beautiful day and welcoming
Thank you very, very much.
me and the others here in Bakersfield.
NOTE: The President spoke at 10:22 a.m. at Meadows Field,
I am particularly grateful that your Congressman, Bill
Bakersfield, Calif. Following his remarks, the President flew by heli-
Ketchum, your mayor, your State assemblyman, your
copter to inspect the Naval Petroleum Reserve No. 1 at Elk Hills,
Calif.
head of the county commissioners-and I brought with
As printed above, this item follows the text of the White House
me Congressman Al Bell-and the Attorney General,
press release.
Evelle Younger, are here. Let me say that the warmth of
the reception and the wonderful bands that are here-I
understand there are some seven bands here-I appreci-
ate very, very much.
Commission on CIA Activities
I had planned to come to Bakersfield on at least two
other occasions in the past. For one reason or another, it
Within the United States
was not possible to get here, so I am particularly pleased to
come and visit your community, your area, and see so
Executive Order 11848. Dated March 29, 1975.
many wonderful people, particularly the young people.
Released April 1, 1975
You have a great area of our great country. You have
EXTENDING THE REPORTING DATE FOR THE COMMISSION
the finest in agriculture. You have the great potential of
ON CIA ACTIVITIES WITHIN THE UNITED STATES
giving to this country added capability in the field of
Section 6 of Executive Order No. 11828 entitled
energy. You are hard-working, dedicated, loyal Ameri-
Establishing a Commission on CIA Activities Within the
cans who give me faith every time that I see faces like
United States, dated January 4, 1975 is amended by de-
these and people such as yourselves.
leting the words "three months from the date of this
We have some problems in America, problems both at
order," and substituting therefor "June 6, 1975."
home and abroad, but these are the kinds of problems that
GERALD R. FORD
can be solved and will be solved with the true American
The White House,
spirit that has taken our country in some 200 years from
March 29, 1975.
13 poor, struggling colonies on the east coast to a country
[Filed with the Office of the Federal Register, 2:49 p.m.,
April 1, 1975]
of 213 million loyal, dedicated, visionary, imaginative
NOTE: The text of the Executive order was released at Palm Springs,
Americans. And I say to you that America is just begin-
Calif.
Volume 11-Number 14
THE WHITE HOUSE
WASHINGTON
April 7, 1975
MEMORANDUM FOR:
JAMES J. CANNON, III
L. WILLIAM SEIDMAN
THRU:
JOHN O. MARSH
MAX L. FRIEDERSDORF
VERN LOEN
FROM:
DOUGLAS P. BENNETT
SUBJECT:
Housing Tax Credit ($2, 000), Provision in the
Tax Reduction Act of 1975
Dr. Larry Woodworth, Chief of Staff of the Joint Tax Committee, Friday
advised me that both Chairmen Long and Ullman have been concerned that
the applicability of this provision may be retarded in a fashion contradictory
to the intent of the provision. Apparently, many new housing developments
and condominiums are priced in such a manner that the first few units are
sold as "loss leaders" so as to attract buyers and as sales pick up, the
prices of the housing units are increased so as to eventually reflect the
"true" sales prices.
Under the certification provision of the statute, the seller is required in the
face of civil and criminal penalties to certify that the particular unit is being
sold at the lowest price at which it has ever been offered. Obviously, the
above described practice would disqualify many of the housing units in the
current inventory thereby diminishing the sought-after effect of this provision.
Long and Ullman are considering issuing a joint statement suggesting that
this technical defect be corrected by minor amendment. The matter has
been discussed with the Treasury Department and, I understand, Secretary
Simon concurs with the amendatory approach as the defect cannot be re-
medied by Treasury regulations.
cc:
Secretary William E. Simon, Secretary Carla Hills, Honorable James
T. Lynn, Honorable James H. Cavanaugh, Honorable Tod Hullin
THE WHITE HOUSE
WASHINGTON
April 8, 1975
MEMORANDUM FOR:
ROGER PORTER
FROM:
DOUGLAS P. BENNETT
113
SUBJECT:
Tax Provisions Relating to Small Business
The following is a brief description of the provisions included in the
Tax Reduction Act which will generally benefit small business.
Investment Tax Credit
(a) A two year increase in the investment credit from 7% to 10%.
(This will in my view be made permanent).
(b) An increase from $25, 00 to $100, 000 in the amount of used
property that may qualify for the investment credit.
Tax Rate Changes - Surtax Exemption
(a) Present law provides for a 22% tax rate on the first $25,000
of income a business receives and 48% on all income above that.
(b) The bill applied a rate of 20% on the first $25,000, 22% on
income from $25,000 to $50,000 and 48% on the balance of taxable income.
(c) This provision is effective for taxable years ending in 1975.
THE WHITE HOUSE
WASHINGTON
April 8, 1975
MEMORANDUM FOR:
JAMES J. CANNON, III
THRU:
JOHN O. MARSH
MAX L. FRIEDERSDORF
VERN LOEN VL
FROM:
DOUGLAS P. BENNETT
SUBJECT:
Tax Reform Bill
In discussion with Dr. Larry Woodworth last week, he described to me
the items expected to be included in the Tax Reform Bill which will hope-
fully be completed by the Ways and Means Committee by late summer or
early fall. Apparently, this reflects the thinking of Chairmen Ullman
and Long.
The starting point for consideration of this legislation will be the Ways
and Means' tax reform bill which was reported out of that Committee
late last year but never was acted on by the House. That bill was basically
structured by Chairman Wilbur Mills.
Larry expects about $5 B revenue will be raised by the following changes
in the law:
(1) Minimum Taxable Income (MTI) - The concept advanced by the
Treasury Department and included in last year's bill will be structurally
changed this year. The changes will probably be reflective of the opposition
from charitable organizations claiming that the Treasury approach would
substantially reduce charitable giving.
(2) Limitation on Artificial Accounting Losses (LAL) - This
proposal relates to the so-called tax shelters. The most "popular" of
which are oil shelters, real estate shelters and farm shelters.
(3) Repeal of DISC.
- 2 -
(4) Repeal of Certain Foreign Taxation Provisions - These will
probably include those provisions in last year's bill which were not dealt
with in the recently signed Tax Reduction Bill. (In addition, some pro-
visions further dealing with oil depletion will be included primarily for
political reasons).
The other provisions to be included will be the simplification
proposal of the Treasury Department which is basically an effort to simplify
tax return preparation by individuals accomplished by eliminating certain
complicated, difficult to compute, itemized deductions and substituting a
"simplification deduction".
Secondly, capital gains and losses will not be dealt with other
than by increasing the capital gains and losses holding period - from six
months to twelve months and also a three-year elective loss carryback.
In place of the sliding scale proposal for capital gains there will be included
the concept of integration. Basically, this means that to some extent the
profits of corporations and dividends received by shareholders would be
taxed only once. 100% integration would cost approximately $9 B, there-
fore, they will probably only go 25% of the way toward integration. Pro-
visions relating to the banking and insurance industries may also be included.
Thirdly, estate and gift tax law will be dealt with in a separate
bill to follow the general tax reform bill.
I am certain that various other provisions will be added in committee but
apparently Ullman hopes to end up with a net revenue gain from this bill.
cc:
Secretary William E. Simon, James T. Lynn, Frederic W. Hickman,
Paul H. O'Neill, William Seidman, Alan Greenspan
bcc: Bill Kendall
Pat O'Donnell
Charlie Leppert
Bob Wolthuis
THE WHITE HOUSE
WASHINGTON
April 8, 1975
MEMORANDUM FOR:
JAMES J. CANNON, III
THRU:
JOHN O. MARSH
MAX L. FRIEDERSDORF
VERN LOEN
FROM:
DOUGLAS P. BENNETT
SUBJECT:
Tax Reform Bill
In discussion with Dr. Larry Woodworth last week, he described to me
the items expected to be included in the Tax Reform Bill which will hope-
fully be completed by the Ways and Means Committee by late summer or
early fall. Apparently, this reflects the thinking of Chairmen Ullman
and Long.
The starting point for consideration of this legislation will be the Ways
and Means' tax reform bill which was reported out of that Committee
late last year but never was acted on by the House. That bill was basically
structured by Chairman Wilbur Mills.
Larry expects about $5 B revenue will be raised by the following changes
in the law:
(1) Minimum Taxable Income (MTI) - The concept advanced by the
Treasury Department and included in last year's bill will be structurally
changed this year. The changes will probably be reflective of the opposition
from charitable organizations claiming that the Treasury approach would
substantially reduce charitable giving.
(2)
Limitation on Artificial Accounting Losses (LAL) - This
proposal relates to the so-called tax shelters. The most "popular" of
which are oil shelters, real estate shelters and farm shelters.
(3)
Repeal of DISC.
- 2 -
(4) Repeal of Certain Foreign Taxation Provisions - These will
probably include those provisions in last year's bill which were not dealt
with in the recently signed Tax Reduction Bill. (In addition, some pro-
visions further dealing with oil depletion will be included primarily for
political reasons).
The other provisions to be included will be the simplification
proposal of the Treasury Department which is basically an effort to simplify
tax return preparation by individuals accomplished by eliminating certain
complicated, difficult to compute, itemized deductions and substituting a
"simplification deduction".
Secondly, capital gains and losses will not be dealt with other
than by increasing the capital gains and losses holding period . - from six
months to twelve months and also a three-year elective loss carryback.
In place of the sliding scale proposal for capital gains there will be included
the concept of integration. Basically, this means that to some extent the
profits of corporations and dividends received by shareholders would be
taxed only once. 100% integration would cost approximately $9 B, there-
fore, they will probably only go 25% of the way toward integration. Pro-
visions relating to the banking and insurance industries may also be included.
Thirdly, estate and gift tax law will be dealt with in a separate
bill to follow the general tax reform bill.
I am certain that various other provisions will be added in committee but
apparently Ullman hopes to end up with a net revenue gain from this bill.
CC:
Secretary William E. Simon, James T. Lynn, Frederic W. Hickman,
Paul H. O'Neill
THE WHITE HOUSE
WASHINGTON
May 28, 1976
MEMORANDUM FOR:
MAX FRIEDERSDORF
THROUGH:
CHARLES LEPPERT, JR.
FROM:
TOM LOEFFLER
SUBJECT:
Request from Rep. Jimmy Quillen
(R. -Tenn.) concerning the
Administration's Position on
HR-9719, Payments in Lieu
of Taxes Act
At the outset of the Congress, the Congressman introduced
HR-1966, a bill similar to HR-9719, the Payments in Lieu of
Taxes Act. Quillen, as well as the National Association of
Counties, has been interested in this legislation for many
years, believing that tax immunity of public lands places an
unfair burden on the taxpayers within the counties and local
governmental units where the lands are located.
Jimmy stated that it was his understanding the Senate would
not act on this legislation unless it passed the House. If,
however, HR-9719 does pass the House, Quillen believes
the Senate will take positive action very quickly.
Because of his strong interest in this legislation, Jimmy has
personally expressed his hope that the Administration would
not strongly oppose this legislation and that, if the bill
reached the White House, the President would not veto it.
Presently the House Rules Committee is scheduled to
consider a rule for HR-9719 on Thursday, June 3. Therefore,
I suggest we give this matter our immediate attention.
cc: Pat Rowland
Alan Kranowitz
THE WHITE HOUSE
WASHINGTON
June 30, 1975
MEMORANDUM FOR:
MAX L. FRIEDERSDORF
THROUGH:
VERN LOEN
FROM:
TOM LOEFFLER
SUBJECT:
Committee on Ways and Means - -
Tax Reform Consideration
The Committee on Ways and Means is holding tax reform hearings
which commenced on Monday, June 23, 1975. This begins the first
phase of a series of tax reform hearings, the second phase of which
will begin in November of this year after completion of development
and passage of the bill resulting from the hearings now ongoing.
The first set of public hearings on tax reform will be in three parts:
(1) panel discussions on the objectives and approaches to tax reform;
(2) testimony from Administration officials beginning July 8; and
(3) presentation of testimony from the interested public. These first-
phase hearings are scheduled to be completed by the end of July.
Mark-up sessions should begin in early September after the August
recess.
TOPICS FOR TAX REFORM CONSIDERATION
IN FIRST PHASE
1. Tax shelters and minimum tax.
2. Tax simplification and reform of domestic income of
individuals.
3.
Foreign income.
4.
Administrative provisions.
5.
Repeal and revisions of obsolete, rarely used, etc.
provisions.
6.
Extension of individual and corporate tax reductions
provided in the Tax Reduction Act of 1975.
- 2
7.
Capital formation (including fast depreciation, invest-
ment credit, and integration of corporate and individual
taxes).
8.
Capital gain and losses.
TOPICS LIKELY TO BE GIVEN TAX REFORM
CONSIDERATION IN SECOND PHASE
1. Estate and gift taxation.
2. Tax treatment of single persons and married couples.
3. Tax exempt state and municipal bonds.
4. Small business tax problems including Subchapter S.
5. Percentage depletion for minerals generally.
6. Tax treatment of financial institutions.
7. Tax treatment of cooperatives.
8. Tax treatment of insurance companies, including casualty
and life companies.
9. Tax exempt organizations including private foundations.
10. Charitable contribution deductions.
11. Net operating less deductions.
12. Bank holding companies; real estate investment trusts.
13. Excise taxes.
14. Integration of pensions and social security.
15. Tax treatment of annuities.
TGL:nd
cc: Charlie Leppert
Bill Kendall
Pat O'Donnell
Doug Bennett
EMBARGOED FOR RELEASE
OCTOBER 6, 1975
UNTIL 8:00 P.H. EDT
Office of the White House Press Secretary
THE WHITE HOUSE
FACT SHEET
THE PRESIDENT'S PROPOSAL FOR TAX CUTS AND FEDERAL SP ENDING RESTRAINT
President Ford is proposing that permanent large tax cuts be made
possible for American taxpayers by Congress joining with him in
limiting the growth of federal expenditures. The tax reductions
proposed by the President total about $28 billion comp ared to 1974
law. This proposal is linked to the adoption by the Congress now
of a spending ceiling of $395 billion for FY 1977. This represents
a reduction of about $28 billion from projected levels for that
year unless action to limit federal spending is taken.
The proposed tax cuts are divided approximately 75 percent for
individuals and 25 percent for business. A family of four earning
$14,000 a year would receive a reduction in their tax liability
of $412 or 27 percent.
I. SUMMARY OF THE TAX CUT PROPOSAL
A. The individual tax reductions will be accomplished by:
$8 billion in cuts to replace the temporary 1975
tax reductions.
$4 billion in additional cuts required to keep
personal withholding rates constant. (The 1975
cut was reflected in withholding over an eight-
month period and, therefore, a $4 billion extra
cut is provided to keep withholding constant.)
$8.7 billion in further tax relief distributed
throughout all income ranges.
B. The business tax reductions will continue the tax
relief for small business provided by the 1975 Act, will
make permanent the higher investment credit rate of 10 per-
cent as an incentive for investment in equipment needed to
increase productivity and to provide new jobs, will reduce
the marginal rate on business income as a first step toward
eliminating the existing tax bias against capital formation,
and will provide special relief to utilities needed to reduce
dependence on foreign energy sources.
(OVER)
2
C. The recommended changes in the individual and business
income tax structure, and their costs, as compared to 1974
law, are as follows:
Individual Tax Cuts
Increase personal exemption from $750
$10.1 billion
to $1,000.
Replace $1,300 low income allowance
$ 4.0 billion
and $2,000 maximum standard deduction
with flat amount standard deduction
of $2,500 for married couples ($1,800
for a single person)
Reduce tax rates
$ 6.6 billion
TOTAL INDIVIDUAL TAX CUTS
$20.7 billion
Business Tax Cuts
Extension of 1975 corporate rate
$ 1.7 billion
and surtax exemption changes
Permanent extension of investment
$ 2.5 billion
credit increase (from 7-10; 4-10
for utilities)
2% corporate rate reduction (48-46%)
$ 2.2 billion
Utilities tax relief previously
$ 0.6 billion
proposed (see Annex C)
TOTAL BUSINESS TAX CUTS
$ 7.0 billion
TOTAL TAX CUTS
$27.7 billion
The effects on individual taxpayers of the President's tax
proposals are shown in the following tables:
3
Tax Liabilities for Family with 2 Dependents,
Filing Joint with Itemized Deductions of
16 Percent of Adjusted Gross Income
(If standard deduction exceeds itemized
deduction, family uses standard deduction.)
Adjusted
Tax Liability
Reduction from
gross
1972-74
:
1975
:
Proposed
1972-74
:
1975
income
law
:
law
: 1976 law
law
: law
$ 5,000
98
0
0
98
0
7,000
402
186
60
342
126
10,000
886
709
485
401
224
15,000
1,732
1,612
1,325
407
287
20,000
2,710
2,590
2,280
430
310
25,000
3,820
3,700
3,370
450
330
30,000
5,084
4,964
4,648
436
316
40,000
8,114
7,994
7,664
450
330
50,000
11,690
11,570
11,180
510
390
Office of the Secretary of the Treasury
Office of Tax Analysis
Tax Liabilities for Single Person with Itemized
Deductions of 16 Percent of Adjusted Gross Income
(If standard deduction exceeds itemized deduction,
individual uses standard deduction.)
Adjusted
Tax Liability
Reduction from
gross
1972-74
:
1975
: Proposed
1972-74
:
1975
income
law
:
law
: 1976 law
law
:
law
$ 5,000
$
490
$
404
$
307
$ 183
$ 97
7,000
889
796
641
248
155
10,000
1,506
1,476
1,227
279
249
15,000
2,589
2,559
2,307
282
252
20,000
3,847
3.817
3,553
294
264
25,000
5,325
5,295
5,015
310
280
30,000
6,970
6,940
6,655
315
285
40,000
10,715
10,685
10,375
340
310
50,000
15,078
15,048
14,725
353
323
Office of the Secretary of the Treasury
Office of Tax Analysis
#
#
4
II. FULLER DESCRIPTION OF PROPOSED TAX CUTS
A. Individual Tax Cuts
The proposed permanent restructuring would replace the
temporary increased standard deduction and the $30 per taxpayer
exemption credit provided by the 1975 Act. The changes
assure that withholding will not be increased and
that, in fact, there will be further tax reductions for
the great majority of taxpayers. As compared to 1974 law,
the President's proposal would:
-- Increase the personal exemption from $750 to $1,000.
-- Replace the present minimum standard deduction (low
income allowance) of $1,300 and maximum standard
deduction of $2,000 by a single standard deduction in
a flat amount of $1,800 for a single taxpayer and
$2,500 for a married couple ($1,250 for married person
filing separately). This compares with the average
standard deduction claimed in 1974 of $1,625 by married
couples and $1,400 by single persons. (The 1975 Act
made temporary changes in the standard deduction, which
are described in Annex D.)
-- Provide rate reductions as shown in the tax rate
schedules attached at Annexes A & B.
B. Business Tax Cuts
The President also proposes to:
-- Reduce the maximum corporate tax rate from 48 percent
to 46 percent.
-- Continue the 1975 Act increase in the surtax exemption
(which determines the amount taxable at rates below
48 percent) from $25,000 to $50,000 of taxable income.
-- Continue the 1975 Act reduction in the rate on the
first $25,000 of taxable income from 22 percent to 20
percent (the second $25,000 of taxable income will be
taxable at a 22 percent rate, with the balance of
income taxed at a 46 percent rate).
-- Make permanent the 1975 Act increase in the investment
credit from 7 percent (4 percent in the case of public
utilities) to 10 percent.
-- Enact a six-point program to provide tax relief to
electric utilities and to reduce dependency on foreign
energy sources (see Annex C for full description).
more
5
III. BACKGROUND ON FEDERAL SPENDING
A. Unless action is taken to restrain federal outlays in FY
1977, spending can be expected to increase by around $53
billion in a single year. Budget outlays are approaching
$370 billion in FY 1976. Without specific legislative action
to limit spending, outlays in FY 1977 will reach $423 billion
or more. The main elements of an increase of $53 billion
are as follows:
(Billions)
Interest on the public debt will rise as
the size of the debt grows. If current
interest rates are maintained, the in-
crease will approach
49
Civilian and military salaries increase
automatically unless the President and
Congress agree on an alternative plan.
Would add more than
+6
Retirement benefits for retired federal
military and civilian personnel also rise
automatically with the cost-of-living
+3
Social security and railroad retirement
payments increase automatically based
upon the cost-of-living index
+12
Medicare and Medicaid payments rise as
costs increase and the number of eligible
recipients go up
+5
Public assistance, food stamps,
housing subsidies and related
programs are tied to the formulae set
in law or in existing contracts
+2
Major construction of wastewater treat-
ment plants now underway will add nearly
+2
Essential procurement and research and
development of military hardware and
maintenance of necessary military
facilities will add over
+3
Increases for energy research and develop-
ment and transportation programs and
inclusion of Export-Import Bank in budget.
+4
Other likely net changes including effect
of Congressional inaction on budget reduc-
tion proposals heretofore proposed by the
President and the effect of probable
Congressional initiatives
+7
TOTAL
53
6
B. Decisions have not yet been made on which programs will
be restrained or curtailed.
-- Specific decisions will be made in the budget
review process leading up to the President's
January Budget Message to Congress.
- All departments and agencies will be called upon
to moderate program growth, expenditures, and
Federal personnel levels.
C. The President has called upon Congress to join with
him in making the tax reductions possible by placing a
limit of $395 billion on FY 1977 expenditures now.
-- A $395 billion ceiling is $25 billion above the
currently estimated spending level this fiscal
year and $28 billion below the level now pro-
jected for FY 1977.
D. Based upon current estimates that FY 1976 spending
may approach $370 billion, the FY 1976 budget deficit
would be about $70 billion. With the President's
proposals, the FY 1977 deficit is estimated in the
range of $40-44 billion.
# # # # #
RED TAG
THE WHITE HOUSE
WASHINGTON
October 7, 1975
MEMORANDUM FOR:
MAX FRIEDERSDORF
THROUGH:
VERN LOEN VL
FROM:
TOM LOEFFLER
T.L
SUBJECT:
Reaction Statements to the
President's Proposed Tax Reduction/
Spending Ceiling--Thomas P. O'Neill, Jr.
(D. -Mass.) and John McFall (D. -Calif.)
Attached for your information are statements issued today by
House Majority Leader O'Neill and House Majority Whip McFall.
These statements are in response to the President's proposed
program calling for Federal tax reductions, coupled with a
ceiling on Federal expenditures for FY 77.
cc: Charles Leppert
Attach.
Rhodes made a floor statement
in support
VL
October 7, 1975
RECEIVED
U. S. HOUSE OF REPRESENTATIVES
WASHINGTON.COM
Office of the Majority Leader
MAJORITY LEADER THOMAS P. O'NEILL, JR., SAYS TAX CUT IS
HEADED IN RIGHT DIRECTION BUT CONGRESS WANTS SPECIFICS
Mr. Speaker, I am glad that this time the President agrees
with Congress on the need for a tax cut.
Just a year ago at this time, when we were neaded deep into
recession, President Ford was calling for a tax increase.
The President now appears to be headed in the right direction,
but the Congress will want to see exactly where he is going. It
is easy to call for a tax cut, but he wants to offset that with a
spending cut that would carve $28 billion out of the hides of the
American people.
Is the President talking about cuts in the veterans programs?
Or health? Or school lunch? Or education?
What about timing? I note that the benefit of the tax cut
would begin in January, 1976. But the bad news, in the form of
program cuts, would not begin until October, 1976, a month before
the election, and would not really be felt until well into 1977.
The President's tradeoff of a tax cut for a spending cut
would cancel out all stimulus for the economy. It would be like
putting a transfusion into one arm and letting blood out of the
other.
The important thing is jobs and people. The tax cut should
be coupled with a program for employment and economic recovery
not some arbitrary budget figure. A flat, uncompromising budget
ceiling is unrealistic. The important thing is to make sure that
unemployment doesn't get to be a way of life.
1975
WASHINGTON, D.C.
October 7, 1975
U. S. HOUSE OF REPRESENTATIVES
Office of the Majority Whip
MAJORITY WHIP JOHN J. McFALL PLEASED PRESIDENT
ACCEPTS DEMOCRATIC TAX CUT, PREDICTS PASSAGE THIS YEAR
A poll in a national news magazine showed yesterday that less than
half the American people consider President Ford acceptable as president
and that the main reason is his consistent and persistent mishandling
of the economy.
Perhaps that's why Mr. Ford last night embraced the Democratic pro-
posal to extend the tax cut and why he trotted out that favorite
Republican whipping boy, galloping government spending.
The suggestion that the tax cut be extended is a step in the right
direction that we welcome, although the Congressional Joint Economic
Committee already has recommended a tax reduction and the House Ways
and Means Committee has been working for some time on a proposal to
give a bigger break to middle and lower income earners. We will pass
this legislation well before the end of the year.
The Joint Economic Committee recommends more stimulus to turn the
economic rebound into recovery. It recognizes, as neither Mr. Ford nor
Herbert Hoover before him recognized, that arbitrary budget cuts never
put a single unemployed man or woman back to work. Nor will they produce
a single additional barrel of oil or bushel of wheat, and scarcities in
food and fuel coupled with high interest rates are the real bogeymen in
producing the inflation the President decries.
Congress will look carefully at the President's proposed spending
cuts. As we have before, we will trim waste and fat and frills. Our
appropriations to date are well within the range suggested by our budget
resolution. But we're not going to cut $28 billion from the areas where
the President has previously sought to cut. We're not going to take $28
billion out of the hides of the unemployed, the young, the elderly, the
ill, the handicapped and the ill-housed.
THE WHITE HOUSE
WASHINGTON
October 24, 1975
MEMORANDUM FOR:
MAX FRIEDERSDORF
THROUGH:
VERN LOEN
VL
FROM:
TOM LOEFFLER
T.L.
SUBJECT:
Report on Ways and Means
Committee Activities concerning
Proposed Tax Reductions
In a mark-up session on Thursday, October 23, the Ways and Means
Committee voted to reduce personal income tax by $12. 7 billion
(a one-year, 2% tax credit up to $12,000 taxable income, plus
permanent adoption of 1975 Tax Reduction Act provisions changing
standard deductions).
The Committee action heavily underscores the Democrats deter-
mination to hold the President's proposed $28 billion permanent
tax reduction and compensurate FY 1977 $395 billion spending
ceiling hostage, supposedly a legislative impossibility to handle
such a proposal as a single program.
The Committee's decisions concerning personal income tax reductions
occurred in the following manner:
The basic motion before the Committee was to reduce personal
income tax liabilities by $12.7 billion in the manner described
above.
(1) Waggonner Amendment -- the $12.7 billion personal income
tax reduction would become effective only if Congress has
passed by December 15, 1975, a Concurrent Resolution
establishing a spending ceiling for FY 1977 at $410.3 billion
or less.
Chair ruled this amendment out of order -- Chair's decision
upheld by party line vote of 24 to 12.
(2) Waggonner Preferential Motion -- to defer Ways and Means
Committee action on personal income tax reductions until
- 2 -
the House Budget Committee has established a recommended
spending ceiling for FY 1977.
Defeated 16 to 21.
(3) Steiger Amendment -- would amend the Committee proposal
by striking the one-year 2% tax credit, providing in lieu
thereof the President's proposed increase in the personal
exemption from $750 to $1,000 per individual.
Defeated 12 to 24.
(4) Committee Proposal -- described above.
Passed 21 to 16.
cc:
Jim Lynn
Bill Seidman
Charlie Leppert
Bill Kendall
Pat O'Donnell
COMMIT ON
HERMAN T. SCHNEEBELI
WAYS AND MEANS
17TH DISTRICT, PENNSYLVANIA
408 FIDELITY NATIONAL BANK But
ROOM 1336 LONGWORTH H.O.B.
WILLIAMSPORT, PENNSYLVANIA 1
WASHINGTON. D.C. 20513
Congress of the United States
1146 FEDERAL BUILDING
HARRISBURG, PENNSYLVANIA 17
house of Representatibes
Mashington, D.C. 20515
November 25, 1975
Dear Republican Colleague:
H.R. 10612, the Tax Reform Act of 1975, is scheduled for Floor con-
sideration the week of December 1. We urge you to vote against the pre-
vious question on the rule and support our effort to adopt a substitute
rule to make a $395 billion spending limitation in order.
The Rules Committee has granted a modified closed rule which allows
only for those amendments agreed upon by the Democrat Members of the Ways
and Means with no Republican input. The Minority was specifically prevented
from including in the Ways and Means request to the Rules Committee an amend-
ment to impose a federal spending ceiling for fiscal year 1977. An effort to
include the spending limitation before the Rules Committee was similarly re-
buffed by the Democrats.
Should we prevail in defeating the previous question and obtain a
vote on such an amendment, and should we successfully amend H.R. 10612 to in-
clude such a spending ceiling in the bill, of course each Republican Member
would be perfectly free to determine on the merits whether or not he wished
then to support the tax bill.
However, should we be unsuccessful in amending H.R. 10612 to include
a spending ceiling, we would hope that the Republican Members of the House
would collectively vote to reject the tax bill. We believe that a vote for
the bill without any spending ceiling is unjustified, given our present and
projected Federal deficits, the state of the economy, and the overall revenue
impact of H.R. 10612. Specifically, in calendar year 1976, according to
Ways and Means Committee estimates, the tax reform portions of the bill would
raise a net total of $745 million, while the tax cuts would aggregate $15.471
billion, for a relationship of more than $20 in cuts for every $1 in revenue
gain.
JOHN RHODES, M.C.
HERMAN T. SCHNEEBELI, M.C.
Concept. Quillen
JAMES H. QUILLEN, M.C.
Jim JOHN B. B ANDERSON, Anderson M.C.
[Dec. 1975?]
(This would accompany a 6-months extension
of the present tax bill.)
Congress is determined to control spending levels in
order to reduce the national deficit.
Congress affirms its commitments to the procedures
established by the Congressional Budget and Impoundment Control
Act of 1974 under which it has already established a binding
spending ceiling for the fiscal year 1976.
If the Congress recommends a continuation of the
tax reduction provided by this Act beyond June 30, 1976,
Congress shall provide, through the procedures in the Budget
Act, for reductions in the level of spending in the fiscal
year 1977 below what would otherwise occur, equal to any
additional reduction in taxes (from the 1974 tax rate levels)
provided for the fiscal year 1977, provided, however,
that nothing shall preclude the right of the Congress to
pass a budget resolution containing a higher or lower ex-
penditure figure if the Congress concludes that this is
warrented by economic conditions or unforeseen circumstances.
(This would accompany a 6-months extension
of the present tax bill.)
shares
Congress approves-of the President's determination to
reduce spending levels in order to reduce the national
deficit.
Congress affirms its commitments to the procedures
established by the Congressional Budget and Impoundment
Control Act of 1974.
If the Congress recommends a continuation of the tax
reduction provided by this measure for the remainder of
the calendar year 1976, Congress shall provide for reductions
in the level of spending which would otherwise occur- by $1.00
for each $1.00 of tax reduction (from the 1974 tax rate
levels) provided in the fiscal year 1977, provided, however,
that nothing shall preclude the right of the Congress to pass
a, resolution containing a higher or lower expenditure figure
if the Congress concludes that this is warranted by changing
economic conditions or other unforeseen circumstances.
BERALD no FORE
11/3/160
(This would accompany a 6-months extension
of the present tax bill.)
shares
Congress approves of the President's determination to
reduce spending levels in order to reduce the national
deficit.
Congress affirms its commitments to the procedures
established by the Congressional Budget and Impoundment
Control Act of 1974.
If the Congress recommends a continuation of the tax
reduction provided by this measure Act. for the remainder of
the calendar year 1976, Congress shall provide for reductions
in the level of spending which would otherwise occur by $1.00
for each $1.00 of tax reduction (from the 1974 tax rate
levels) provided in the fiscal year 1977, provided, however,
that nothing shall preclude the right of the Congress to pass
a resolution containing a higher or lower expenditure figure
if the Congress concludes that this is warranted by changing
economic conditions or other unforeseen circumstances.
FORD & LIBRARI 07083
Congress is determined to continue the tax reduction for the
first 6 months of 1976 in order to assure continued economic
recovery.
Congress is also determined to continue to control spending
levels in order to reduce the national deficit.
Congress reaffirms its commitments to the procedures established
by the Congressional Budget and Impoundment Control Act of 1974
under which it has already established a binding spending ceiling
for the fiscal year 1976.
If the congress adopts a continuation of the tax reduction
provided by this Act beyond June 30, 1976, and if economic conditions
warrant doing so, Congress shall provide, through the procedures
in the Budget Act, for reductions in the level of spending in the
fiscal year 1977 below what would otherwise occur, equal to any
additional reduction in taxes (from the 1974 tax rate levels)
provided for the fiscal year 1977, provided, however, that nothing
shall preclude the right of the Congress to pass a budget resolution
containing a higher or lower expenditure figure if the Congress
concludes that this is warranted by economic conditions or
unforeseen circumstances.
Congress is determined to continue the tax reduction for the
first 6 months of 1976 in order to assure continued economic
recovery.
Congress is also determined to continue to control spending
levels in order to reduce the national deficit.
Congress reaffirms its commitments to the procedures established
by the Congressional Budget and Impoundment Control Act of 1974
under which it has already established a binding spending ceiling
for the fiscal year 1976.
If the congress adopts a continuation of the tax reduction
provided by this Act beyond June 30, 1976, and if economic conditions
warrant doing so, Congress shall provide, through the procedures
in the Budget Act, for reductions in the level of spending in the
fiscal year 1977 below what would otherwise occur, equal to any
additional reduction in taxes (from the 1974 tax rate levels)
provided for the fiscal year 1977, provided, however, that nothing
shall preclude the right of the Congress to pass a budget resolution
containing a higher or lower expenditure figure if the Congress
concludes that this is warranted by economic conditions or
unforeseen circumstances.
FOR IMMEDIATE RELEASE
THURSDAY, DECEMBER 18, 1975
Following is a statement by Speaker Carl Albert of Oklahoma on
the tax bill:
House Republicans today joined with President Ford in approving an
increase in taxes and a recession. By winning their battle to deny the
nation an extension of the tax cuts that began to pull this nation out of
the worst economic decline in 40 years, President Ford and his band of
willful Republicans are threatening nearly every American with economic
uncertainty in the months ahead.
The stunning decision of 125 House Republicans to support Ford's veto
means that in two weeks the amount of money withheld from paychecks for
taxes will increase by $4-$6 a week. Nationally it means that about
$1.5 billion a month will be pulled out of an economy still struggling
to overcome the worst recession since the Great Depression.
While the precise consequences cannot be foretold, there has been
virtual unanimity among economists that failure to extend the tax cuts
would halt the hesitant steps of the economy away from recession and
raise the likelihood of further economic downturn. This will mean still
higher unemployment and higher federal budgetary deficits caused by a
recession economy.
Congressional Democrats sent Ford a bill yesterday that would have
kept the temporary tax cuts in effect and would have prevented the rise
in taxes that now will take place on January 1. Ford vetoed that bill
last night, repeating his insistence on a $28 billion tax cut effective
January 1 to be accompanied by an equivalent reduction in federal spending
to be effective October 1, 1976.
-2-
When Ford first made this proposal two months ago, it was widely
condemned as a transparently political plan that would overstimulate
the economy during the election campaign and depress it after the
campaign was over. His proposal is reminiscent of the program
perpetrated by Ford's mentor, Richard M. Nixon, in 1972. The
Nixon program was a major contributing factor to the
recession that followed the 1972 election.
Ford's contention that Congress should adopt a $395 billion
spending ceiling now for the year beginning Oct. 1, 1976 is a transparent
fraud. Both the President and all the President's men have been
asked, time and time again, to provide some inkling of where the
budget should be cut. Time and time again they have refused even to
hint at what they have in mind.
In five of the last seven years Democrats in Congress have voted
less money than Republican Presidents have sought. This year a
Democratic Congress has again appropriated less money than
Ford requested.
Congress, inaugurating its new budget procedures a year in
advance, actually placed a ceiling of $375 billion on this
year's budget. To place a $395 billion ceiling on a budget
that has not even been submitted, as Ford demands, would subvert the
new process that Ford himself asked Congress to start. Last week a
bipartisan delegation of Congressional Democrats and Republicans called
on Ford to warn him that his actions threatened to undo this procedure.
Despite Republicans' rhetoric seeking to disguise their opposition
to the tax reduction program espoused by Democrats, the record is crystal
clear. Ford himself said, while signing the temporary cuts voted last
spring, that he was doing SO reluctantly, At every step of the
-3-
legislative path trod by the bill to extend those cuts, Republicans
voted "NO." Their actions culminated today in the vote to sustain
the veto. In order to pass the bill over the veto, 282 votes were
needed. Democrats voted 246-32 for the tax cuts and economic recovery;
Republicans voted 125-19 for higher taxes and recession.
Ford's veto and the votes of House Republicans are fiscally
irresponsible political actions that jeopardize the economy of the
nation for no reason other than Gerald Ford's effort to
appeal to right wing Republicans and rescue his failing campaign for the Presi-
dential nomination.
#
FOR IMMEDIATE RELEASE
THURSDAY, DECEMBER 13, 1975
Following is a statement by Speaker Carl Albert of Oklahoma on
the tax bill:
House Republicans today joined with President Ford in approving an
increase in taxes and a recession. By winning their battle to deny the
nation an extension of the tax cuts that began to pull this nation out of
the worst economic decline in 40 years, President Ford and his band of
willful Republicans are threatening nearly every American with economic
uncertainty in the months ahead.
The stunning decision of 125 House Republicans to support Ford's veto
means that in two weeks the amount of money withheld from paychecks for
taxes will increase by $4-$6 a week. Nationally it means that about
$1.5 billion a month will be pulled out of an economy still struggling
to overcome the worst recession since the Great Depression.
While the precise consequences cannot be foretold, there has been
virtual unanimity among economists that failure to extend the tax cuts
would halt the hesitant steps of the economy away from recession and
raise the likelihood of further economic downturn. This will mean still
higher unemployment and higher federal budgetary deficits caused by a
recession economy.
Congressional Democrats sent Ford a bill yesterday that would have
kept the temporary tax cuts in effect and would have prevented the rise
in taxes that now will take place on January 1. Ford vetoed that bill
last night, repeating his insistence on a $28 billion tax cut effective
January 1 to be accompanied by an equivalent reduction in federal spending
to be effective October 1, 1976.
When Ford first made this proposal two months ago, it was widely
condemned as a transparently political plan that would overstimulate
the economy during the election campaign and depress it after the
campaign was over. His proposal is reminiscent of the program
perpetrated by Ford's mentor, Richard M. Nixon, in 1972. The
Nixon program was a major contributing factor to the
recession that followed the 1972 election.
Ford's contention that Congress should adopt a $395 billion
spending ceiling now for the year beginning Oct. 1, 1976 is a transparent
fraud. Both the President and all the President's men have been
asked, time and time again, to provide some inkling of where the
budget should be cut. Time and time again they have refused even to
hint at what they have in mind.
In five of the last seven years Democrats in Congress have voted
less money than Republican Presidents have sought. This year a
Democratic Congress has again appropriated less money than
Ford requested.
Congress, inaugurating its new budget procedures a year in
advance, actually placed a ceiling of $375 billion on this
year's budget. To place a $395 billion ceiling on a budget
that has not even been submitted, as Ford demands, would subvert the
new process that Ford himself asked Congress to start. Last week a
bipartisan delegation of Congressional Democrats and Republicans called
on Ford to warn him that his actions threatened to undo this procedure.
Despite Republicans' rhetoric seeking to disguise their opposition
to the tax reduction program espoused by Democrats, the record is crystal
clear. Ford himself said, while signing the temporary cuts voted last
spring, that he was doing so reluctantly, At every step of the
legislative path trod by the bill to extend those cuts, Republicans
voted "NO." Their actions culminated today in the vote to sustain
the veto In order to pass the bill over the veto, 282 votes were
needed. Democrats voted 246-32 for the tax cuts and economic recovery;
Republicans voted 125-19 for higher taxes and recession.
Ford's veto and the votes of House Republicans are fiscally
irresponsible political actions that jeopardize the economy of the
nation for no reason other than Gerald Ford's effort to
appeal to right wing Republicans and rescue his failing campaign for the Presi-
dential nomination.
#
94TH CONGRESS
1ST SESSION
H.R.11227
IN THE HOUSE OF REPRESENTATIVES
DECEMBER 17, 1975
Mr. RHODES introduced the following bill; which was referred to the Com-
mittee on Ways and Means
A
BILL
To amend the Internal Revenue Code of 1954 to provide that
the current withholding tables will remain in effect until
March 15, 1976.
1
Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 That (a) section 3402 (a) of the Internal Revenue Code
4 of 1954 (relating to income tax collected at source), as
5 amended by section 205 of the Tax Reduction Act of 1975,
6 is amended by inserting after the second sentence thereof
7 the following: "The tables SO prescribed with respect to
8 wages paid after December 31, 1975, and on or before
9 March 15, 1976, shall be the same as the tables prescribed
I
2
1 under this subsection which were in effect on December 10,
2 1975.".
3
(b) Section 209 (c) of the Tax Reduction Act of 1975
4 is amended by striking out "before January 1, 1976" and
5 inserting in lieu thereof "on or before March 15, 1976".
1976.
Referred to the Committee on Ways and Means
tables will remain in effect until March 15,
To amend the Internal Revenue Code of 1954
1ST SESSION
94TH CONGRESS
DECEMBER 17, 1975
By Mr. RHODES
to provide that the current withholding
A BILL
H. R. 11227