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January 26 , 194^* Mrs. Georgia -^llery, 110 East Liberty Street, fielding, Michigan. My dear Mrs. Ellery: My suggestion to which you refer in your letter of January 21 was that the individual exemption for a single person, not head of a family, be reduced from the present #750 to $600. This would mean that a person having an income of $1,000, for example, would pay a tax of $40, i.e., $1,000 less the $600 exemption would leave $400 of taxable income on which a 10 per cent tax would be $40. I understand this would still be substantially less than the rates prevailing in England and other countries. I favored this in preference to a general sales tax, which is'inequitable because, unlike the income tax, it is not based on ability to pay and bears heaviest on those least able to pay. Under a general sales tax which has been advocated by various business groups, an individual with an income of $1,000 would pay $100 in taxes if assessed at the rate of 10 per cent. This would be $60 more than I proposed under the income tax. Of course, the smaller your annuity, the less the Federal tax would be. In any event, I cannot believe that the amount of tax you would have to pay would make the difference between your retaining your home and being obliged to apply for admission to some charitable institution. Sincerely yours, (Signed) M. S. Eccles M. S. Eccles, Chairman. IT :b
@FedFRASER