Statement on Income Tax Revenues.

THE INFORMATION upon the income tax collections for the month of March is not sufficiently advanced to determine their effect upon the budget for the current year. As a rule they furnish a close measure of what collections may be expected from this source in the calendar year. The result is most gratifying. They indicate that the unfavorable developments of last fall did not affect individual incomes to the extent that many had feared, nor did they prevent the corporations of the country from reporting for tax purposes a net income substantially in excess of that reported for the calendar year 1928. Generally speaking, March income tax collections indicate that the collections from individual taxpayers, excluding the tax reduction factor, will be somewhat less than collections .during the calendar year 1929, but will be substantially in excess of collections during the calendar year 1928. In so far as corporations are concerned, income taxes paid during the calendar year 1930 will apparently not fall short of collections during the calendar year 1929, notwithstanding a $90 million reduction resulting from the lowering of the rate from 12 percent to 11 percent.

The Treasury seems to have estimated income tax collections for the fiscal year 1930 with remarkable accuracy, and it is apparent that the tax reduction enacted by the Congress was fully justified. The figures submitted in the Budget message estimated income tax revenue in the fiscal year 1930 at $2,480 million without taking into account the tax reduction subsequently provided for. The March collections indicate that income tax revenue will actually aggregate $2,400 million which, allowing $85 million for tax reduction, would correspond to $2,485 million under the old rates.

On the other hand, there has been a substantial falling off in customs duties. The estimated revenue from this source amounting to $600 million whereas present indications are that not more than $560 million may be expected this fiscal year.

From these estimates and the current rate of expenditure it appears that we should be able to close the fiscal year ending the 30th of next June with a very moderate surplus.

It is impossible at this early date to estimate with accuracy the situation in the next fiscal year (that ending June 30, 1931 ). The Budget indicated, after the tax reduction which has since been enacted, a surplus of $47 million for the next fiscal year. On the revenue side the Treasury sees no occasion to make any substantial revision of its estimates. Since the Budget figures were submitted, legislation enacted at the present session of Congress has imposed a burden of additional expenditures amounting to $30 million during the next fiscal year. The major difficulty in prospect, however, arises from the fact that bills already favorably reported by congressional committees, if enacted into law, would entail an additional expenditure of nearly $300 million next fiscal year and, as far as we can see today, inevitably result in a deficit. The situation clearly calls for most rigid economy and deferment of even otherwise justifiable expenditures by both the legislative and executive departments.