Government expenditures have been and must continue to be held at the lowest safe levels.  Since V-J day Federal expenditures have been sharply reduced.  They have been cut from more than $63 billion in the fiscal year 1946 to less than $38 billion in the present fiscal year.  The number of civilian employees has been cut nearly in half—­from 3 3/4 million down to 2 million.

On the other hand, Government revenues must not be reduced.  Until inflation has been stopped there should be no cut in taxes that is not offset by additions at another point in our tax structure.

Certain adjustments should be made within our existing tax structure that will not affect total receipts, yet will adjust the tax burden so that those least able to pay will have their burden lessened by the transfer of a portion of it to those best able to pay.

Many of our families today are suffering hardship because of the high cost of living.  At the same time profits of corporations have reached an all-time record in 1947.  Corporate profits total $17 billion after taxes.  This compared with $12.5 billion in 1946, the previous high year.

Because of this extraordinarily high level of profits, corporations can well afford to carry a larger share of the taxload at this time.

During this period in which the high cost of living is bearing down on so many of our families, tax adjustments should be made to ease their burden.  The low-income group particularly is being pressed very hard.  To this group a tax adjustment would result in a saving that could be used to buy the necessities of life.

I recommend therefore that, effective January 1, 1948, a cost of living tax credit be extended to our people consisting of a credit of $40 to each individual taxpayer and an additional credit of $40 for each dependent. [p.10] Thus the income tax of a man with a wife and two children would be reduced $160.  The credit would be extended to all taxpayers, but it would be particularly helpful to those in the low-income group.

It is estimated that such a tax credit would reduce Federal revenue by $3.2 billion.  This reduction should be made up by increasing the tax on corporate profits in an amount that will produce this sum—­with appropriate adjustments for small corporations.

This is the proper method of tax relief at this time.  It gives relief to those who need it most without cutting the total tax revenue of the Government.

When the present danger of inflation has passed we should consider tax reduction based upon a revision of our entire tax structure.

When we have conquered inflation, we shall be in a position to move forward toward our chosen goals.

As we do so, let us keep ever before us our high purposes.  We are determined that every citizen of this Nation shall have an equal right and an equal opportunity to grow in wisdom and in stature and to take his place in the control of his Nation’s destiny.