Presidential Statement No. 5 on Economic Issues: Further Tax Reduction.

1. TO SUSTAIN the prosperity of the economy, this administration has enacted the most far-reaching tax reductions in our history. We have already cut both individual and corporate income tax liabilities by nearly one-fifth. We have pledged excise tax cuts in 1965, and we anticipate further income tax cuts in the years ahead as part of our program for a prospering, peacetime economy.

2. In 1962, important measures were taken to help industry modernize its facilities.

--The revision of the depreciation guidelines added $1 ½ billion a year to corporate cash flow.

--The investment credit lowered business tax liabilities by more than $1 billion a year.

3. The Revenue Act of 1964 cut personal and corporate income tax rates, raising private after-tax incomes directly by $11 1/2 billion. This reduction has given a great boost to the economy, as our advances in the past year--3d quarter 1964 over 3d quarter 1963--plainly show (annual rates):

--The gross national product is up $40 billion, or 4.6 percent in stable dollars.

--Corporate profits are up 22 percent (preliminary estimates).

--Business investment in plant and equipment is up 11.4 percent.

--Consumer income, after taxes, is up $32 billion--and consumer buying is up $27 billion, the greatest such increase in our peacetime history.

4. The size and timing of further tax reduction must Be tailored most carefully to fit

--the developing budget program as a whole;

--changing business conditions, so that tax cuts serve to sustain prosperity without inflationary excesses.

5. Currently, the Treasury Department is intensively studying each of the 75 excise taxes to design a rational program of excise tax removal and reduction. Later, we will again focus on income taxation-both personal and corporate--as the major areas for anticipated future tax cuts.