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House Speech Taxes, February 28, 1951
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House Speech Taxes, February 28, 1951
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Gerald R. Ford Congressional Papers
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The original documents are located in Box D14, folder "House Speech Taxes, February 28,
1951" of the Ford Congressional Papers: Press Secretary and Speech File 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. The Council 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States of America his copyrights in all of his unpublished writings in National Archives collections.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.
Digitized from Box D14 of The Ford Congressional Papers: Press Secretary and Speech File at the Gerald R. Ford Presidential Library
6.R.7., Jr. ziv by rxa
la
GERALD R. FORD, Jh. - MICHIGAN
NR. SPEAKER - The President in his proposals for a 16 billion dollar
increase in the federal that burden has recomended that the midmum tax on
capital giins be increased from 25 to 373 per cent. There may be nome noed
and justification for on over-all increase in this rate but such an increase
would accentante in at least one instance what 10 alroady a gross inequity
in the low. I refor specifically to the imposition of the copital goins
tax on the profit on the sale of a home where the individual reinvests the
proceeds in another home.
Recent testinony before the House Committee on Ways and Means has
brought to the forefront the need for a revision in existing lew. The staff
of the Joint Committee on Internal Reverne Tenation two yours age recognized
the gross inequity in the present law and recomended that legislative action
be taken to renedy the situation. The Treasury Department says it has the
matter under study.
I fimly believe the Congress should take the necessary action during
this session. In Jamury of 1950 I introduced H.R.6815 which would to a
substantial degree handle the situation. On Jamuary 9. 1951 I reintroduced
the sono bill in the 82nd Congress. It is my understanding that other pro->
posals of a similar nature are before the Committee on Vegre and Heans.
At the present time the Treasury, and it would to vorse if the Presi-
dent's tax recommendations are approved, has a "honds-I-win-tails-you-loss"
policy. The federal government says to its citizens. you connot deduct a
real loss on the sale of your home in conjuting your income tax and at the
unno time makes its texpayers pay a tax on purely theoretical gains.
FORD s LIBRARY GERALD
Recently a vitness before the Committee on Mays and Honan gave
the following testimeny in reference to this problem:
"Let no give you a claring emmple of what the present late
does. Suppose that in 1946 I bought a home in Detroit for $10,000
and my brother bought one in Cleveland for $10,000. AB a result
of the cheapening of the value of the dollar, the fair market value
of my home in Detroit is nov $15,000 and the fair market value of my
brother's home in Cloveland 10 similarly $15,000. I on transforred
to Clovelend from Detroit and my brother is transferred to Detroit from
Cloveland, and ve decide simply to trade homes.
"The law nov auyo that I realise a termble orin of 05,000 when
I take over my brother's house, and he reclises a termble gain of
$5,000 when he takes over my house. Because VD vore transforred in
our jobs, we are each penalised to the extent of the tax on $5,000
worth of increased value which is not real cain.
"Lot us take another emmple. I have been employed tv the X
Corporation in Midville, U.S.A., for 20 years. Midville is cosentially
a one-industry town. The X Corporation at its plant in Midville produces
cluminum vâniove. It also has a plant in Conterville, U.S.A., where
it produces warfous other alumimm products. The National Production
Authority prohibits the Midwille plant from making any more alunimm
vindows, and the Centerville plant has received a large order from the
Military Retablishment for the production of vital parts for military
aircraft. Because of the National Production Authority order it is
1
GERALD FORD LIBRARY
necessary to the X Corporation to closs down - at least tengerorily -
its Midville plant, but It needs all of its my Midville employees to
vost on the military contracts at its Centerville plant. I on one of
the employees transferred to Conterville.
"Decense of the closing down of the plant at Midville, I, along with
many other employees in Midville, am forced to sell my home. That because
Midville 10 cosentially a one-industry town, and the industry 10 shutting
down, I connot 0011 my home even for what I paid for it and I an forced
to take a substantial loss. Tot, when I purchase a nov home in Centerville,
I on compelled to pay a higher price."
Hore 10 another situation. Under existing law, if for estample He Jonos'
home 10 destroyed w fire, or w flood, or w some other catastrophe, or if it
is talen w the government for public purposes, the min, If any, resulting
from the insurance indomity or the condemation more 10 not recognised, pro-
vided I use the proceeds thereof to sequire smother home. Dut if Jones is
forced to move from one city to another because of a change in his Job, he 1s
cought in a trap. If his old home has increased in value over the original
purchase price, this increase vill be taxed to him as a onin, yot at the came
time he is required to pay a comparable price for his nov home. Jones had a
home, and nov all he has is emother one, the cost of which takes all the INO->
coods from the sale of his first home. Neither residence to worth any more
or any loss than the other. But in changing his home, he has insurred a our-
stantial tax liability to the federal government. Naturally the home owner
does not believe that this sort of treatment 10 fair.
ze is most important during the critical mobilisation period that the
Congress holp rether than hinder the mobility of our working non and women. ORD
-3-
GERALD LIBRARY
The adoption of the President's tax recommendations without a change
in the Internal Reverno Code along the lines contained in my Mll
will definitely penalise citizens vho must novo from one place to
another in order to find employment in the defense recrement
gron. The perpetuation of the present law with a 2015 increase in
the penalty for anll Income homo ovhers will hampor and impode our
mobilisation effort. Furthermoro, it is norally intefensible to
contimue this "hends-I-vin-teils-you-lose" policy. Congress must
do something this year to alleviate this unmirranted hardship on a
vast seguent of the American people.
FORD LIBRARY &