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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,

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