View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

B O A R D OF G O V E R N O R S

O TE
F H

FEDERAL RESERVE SYSTEM

Q ) f f i c e

Correspondence
Chairman Eccles

Ytom

Date
Subject;

25,19^

Treasury Tax Meetings

Richard A. Husgrave

Early in the week LIr, She re sent over an outline of
discussion topics f o r the tax group, asking f o r comments* For
your information I am attaching the l e t t e r containing my suggest i o n s . I do not think that you w i l l find i t necessary t o study
the outline yourself since i t was a t e n t a t i v e draft only.
The f i r s t meeting of the group i s scheduled f o r
Monday.




82* XSU*

Kr* umi* nham*
Aeeiirfcasst Dtro&tor of fm
Iteshis&toii,

C* 25

Bear Mr,, Short*
I

y w eutliM of 6iseu**tcm toplo* for t3»
«?feu4y of
asA isrlll lot ym Irnvo & ftsr £«Boral
^mists for u t i t tkoy
s xs
worth*
2tar# Is
4iSi&rmm, of oooroe, botwoon the
S s d of oattlim ighlo& is
&t l
lor ^iosscsioa
th» kind of mtlim soft $aii*&lo for
ovoatu^l report
postwar iosotlosu I M »ot gait* *s*ro wfelefa of t&o two
L
w tors in tsitwl, But in *ltfc*r
it ssigfetfcow l l to
oo*^$tr*.t* o& tko
&a|»ortftfct ospocrfeo « t ths
of *0£loc&tog s m of tho low ofiso&tiol OBO«» X
washer
yow ostllso
»ot too ooa^robmmtoo, tfcorefcy
iMfcis^ onpfeM&s or ttio is&sfc te^ortsBt ooittfct*
I thiak «)t*t it Mgfafe bo m i l to <tiviao tfao
l&to to* 9«*feo* Fart I to
with tte mm or
tran«itioa period osai Fort I I *ith
problosu
division toos&s ite£irc&lofcoctuaot&» laeu*** for tiaoco t*o
porlods
dl#ti*a«tly diff*ro$fc# bofete vdth rotjmet to tfe*
*eos*o»lofceekgrsurid&M
ro*po*t to th* «p#eiflo t^odt of
tox policy*
In mrt ft, tfooliag *ttk t&o tr«miitioa porioa, it
would aot fco too aiffiotjlt to *et
sowr*! a^lole siuwfcag
host w Mt^mlituros rod pro&iotioa
tapor off £&m tiso
p**k mi km tim traudtioa to pw&mb&m pro£uofcio& might
*&*£*» Qa* of t&* S£od*lt eitosH t U « t for * tftstinotly
tlonory a&tootioa* time raising th* %mwtioa ot wlmt
oxpo^turoo
fco
t«tjro»4 off* 0& tto teolt of mwrngblm*
s




ropsNtisg tha
of tbo Garsam oadi Jis^aaoio imrsn ro&scemblo
®mww* shouldfeopooeiblo for tbi» goriodU I doubt whether
wry doioilod asmss^tiom; with ro«#oot to tho osurso of tfao
transition* my by
&ro soooofory for diiousoissg tfeo
tr*u'!gi$iea t«* problem** ^groossso&t o& tfco
dogroo of
"j^tfttalaoM* of tfeo traissitioa sdglit *uffico*
ffao mXn point© to bo dleouetM Might bo (1) tho
ton of tko 0200profits tos* (2) postiblo to* «4ju«t»
mats with rospoot to 4imi§§ol wagon* mmmwnlm oostof
oto*# tad (5) tho tlail&e <*f tho initial roduotio&i in ofcfeor
mrt3$io
'
all of thoao poifeti could bo oottlod
fairly briofly eo as to ^orait
-os^taol* im tho
transition glottiro*
f^rt Jl- of tfeo iftu^y
woulo &ml *ith tho ?oet~
tro&oitioa poriod mula, bc yon
h y to bo divide
mm
Jjato two emotions« tl*o flret otio do&liag witb tfe» oooooalo
background a sf
xr
objoetiwr of to* policy
tho aoocmd *&t&
tho etfuot^ro of tho p<$s&mr to* jpotm*
in tfco first- sosrtion, I tfciak that it might bo bettor
to otort out with o firm ai&to&o&t of sosio principle* of poot~
ma? toss pulley rothor Warn with 0 foroeast of
scenario
condition*, ftde wild.
two adroit »£0«* First* it would
ohosr that the 2&&i» points ivitlt rospoot to
jwieioxi e m bo
e
mdo fairly iadft$«^08fely of & prooioo o^layg^at ond iacoiao
forooaot* Soooad* it would ovoid Raising tho ^rogwm on tbo
validity of it ratMr opaeuletlvo ootiaato* fbo uetml mthod
of podralotiag ft, «*y» #20 billion Im^sot «md * #140 Mil ion
iaooao lovol «&d ti«m froooodiug to sot up a tsafiyrfeas*whioh
would
tJ^o W^got m th^t ^ftall
t
lovol, iat
nono too MUHidt lu £mrticuX*r, it toomo to imply thot if a
fll^O billion iwol i^ r»oobodf thia IotoI 00^ bo tuatolnsd
tmdor bolwood bu^ot oonditioiur* It will bo
to
bo turo# to mifco ooiao osti^t&to irttk rotpoot to on^w^it^rot
on iMiootion of tbo yioM oigtdfio&aoo
of f»ropoto&
But it ml$k% bo ^osoiblo to do this in
tho ooecud too^lorii in com^ootloa witfe tl^o nottiol
oiid for tbit imrpo^o osio or tm isoam sio^olo mp bo »ot up*
In tbo firnt «oetiouf kowovor, it might bo bottor to
etw prlaoiplo« of to^ ,dobt ^nd baflgot
:
ihowi&ftt tho jpolioy should ^ tm^or difforoxit tots of
tio&e* but wotdd mot bo
m Jost om forteait of oo&<3itlo&«*




in the toee&d mztioa, foiling, with ifeo poafcimr t*x
structure, I
wbothor it might aot bo m i l to concentrate
m th» two or thrm mtn vvohlmt, lo&irtfcg %h& minor
for
diraiftflon* Froblra ( I ) Mght bo tfc* w&olo quostioa of
ooordia&tt&g
oad corporate inccra* taxation* FrtfeloA
(2) might Xm t&e te^aot of t&2a&tio& on Investment, including
tfeo dlMfMsioa of troat^nt or los^oe* dopraoiatioix $ & tariou®
m
typ^s of insentivo
Problm (3) might to a di#ou&sio&
of th* ?&l&ti?o weights to t^ nlaood npm immm v « m i
"high i&oa&o* Krermis *low imsom*
with twm *t*tia~
iioal aafclytie of t&o weight of different
upon entrap*
tion end cavingb* Having foroalated a policy ou t&ete isa^or
polata, it would tteoa bo rolatiwly eaty in a ooaeludi&£ part
to ©umfcriee few tfee federal ta* structure would look at varioua
lavole of taeeae*

A study of this tort would i*ply ole**rly what kiad
or tear roeoss^eii&atle&i the treasury would w*&t to asko depead"
i&g upon oocmotde develegawst** But i t would not eeafett the
Treasury to an altogether epeelfie program baaed upoa eatl**
sg&ted future* dewlepftrat*
idgtA well ?rwe wro»g# rince
It eppeere tisat a atateaesit
to bo t&ade well in adnmee of
&#tufel gostis&r tax legislation* m . i&ete&rafe feere suggested
&d|$tt prove sore
ishm eg^oifie mdvaaee eca^tsente ae
proposed in the Saruok import as War
Fostwar Mjusti&eiit
Folloie*,
Chilimm. E^ele* hee Ju#t iwtursed to
to cot his Ideae in * day or two*




and X hop*

£i*»eor*ly your#*

ftieherd A* Musgnwo*
Mirieiefc of Heeaerofe a&d Statistic**